VCs Betting on Companies Holding Virtual Assets…Will the Hoarding Strategy Boom?

Recently, more companies are adopting a Bitcoin (BTC) accumulation strategy modeled after Strategy (formerly MicroStrategy). In particular, as these companies are attracting significant interest from venture capital (VC), there is growing attention on whether corporate hoarding of virtual assets (cryptocurrencies) will become even more widespread.

On the 1st (local time), the virtual asset-specialized media platform The Block reported that companies adopting a model of accumulating virtual assets, such as Strategy and Japan’s Metaplanet, are on the rise.

The Block especially focused on these companies’ MNAV multiples. The media outlet stated, “The market capitalizations of Strategy and Strategy are 1.69 times and 4.24 times the value of the virtual assets they hold, respectively,” and added, “These premiums are attracting attention from VCs.”

As investors expect higher returns through the MNAV premium, it is being suggested that capital raising is becoming easier. Rob Hedrick, General Partner at Dragonfly, said, “For now, neither investors nor issuers are worried about these companies,” adding, “We’ll continue raising funds until there’s actual risk.”

However, there are concerns that if a company’s stock price falls below NAV, the risk will become more pronounced. If the virtual assets they hold are valued below their market capitalization, a ‘forced liquidation’ could occur, and the sale of such assets could trigger further declines in virtual asset prices.

Hedrick predicted, “This model is a speculative product aiming for short-term returns,” and added, “Long-term survival will be difficult.”