Crypto-buying public companies are entering a “player vs player” stage that will see firms competing harder for investor money, and that could drive up crypto market prices, according to Coinbase.
“The days of easy money and guaranteed mNAV [multiple of Net Asset Value] premiums are over,” Coinbase head of research David Duong and researcher Colin Basco said in a report on Wednesday.
The pair said that digital asset treasuries (DATs) are in a “player-versus-player” stage where “strategically positioned players will thrive,” adding they expected crypto markets would “benefit from the unprecedented capital flowing from these vehicles to supercharge returns.”
Analysts have raised concerns that the market for crypto buying firms is oversaturated and many of them may not survive in the long term. NYDIG said on Friday that many crypto treasury companies saw their values drop even as Bitcoin (BTC) gained.
Crypto treasuries at “critical inflection point”
Duong and Basco said that early movers like the major Bitcoin holding firm Strategy “enjoyed substantial premiums,” but “competition, execution risks and regulatory constraints have contributed to mNAV compression.”
“The scarcity premium that benefited early adopters has already dissipated,” they said, and now crypto treasuries have ”reached a critical inflection point.”
At their current player-versus-player stage, a treasury company’s success “depends increasingly on execution, differentiation, and timing rather than simply copying the MicroStrategy playbook,” the report said.
“September effect” an unreliable indicator
Meanwhile, Coinbase’s researchers said the “September effect,” where investors hold off on Bitcoin due to it historically falling over the month, shouldn’t be relied on as a trading indicator.
Bitcoin saw a decline in September for six years in a row between 2017 and 2022, giving investors the impression that the month “tends to be a bad time to hold risk.”
“Yet, if you were to trade on this assumption, you would have been wrong in both 2023 and 2024,” Duong and Basco said.
“Month-of-year isnʼt a statistically dependable predictor of whether monthly log returns will be positive or negative for BTC,” they added. “We donʼt think monthly seasonality is a particularly useful trading signal for Bitcoin.”
Fed will cut twice, leaving market “room to run” in Q4
Duong and Basco said that they expect the Federal Reserve to cut rates when it meets on Tuesday and again at its meeting next month, adding that the “crypto bull market has room to run” early in the fourth quarter.
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They added that Bitcoin could continue to outperform as it “benefits directly from existing macro tailwinds,” such as rising US inflation, which rose 0.4% in August to 2.9% over the last year, according to an update on Thursday.
The market is widely expecting the Fed to cut rates by 25 basis points both next week and in October. Rate cuts have historically been a boon for crypto and other risk assets.
“Heading into Q4, we maintain a constructive outlook on crypto markets, anticipating continued support from robust liquidity, a favorable macroeconomic environment, and encouraging regulatory developments,” Coinbase researchers said.
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