Weekly dividend-paying preferred stocks extend their life; is the DAT era coming to an end?

ME News message: On June 4 (UTC+8), June 3, Tom Lee’s Ethereum treasury company Bitmine announced that it plans to publicly issue 9.50% perpetual preferred stock, raising $300 million, with dividends paid weekly in cash. Earlier, at the end of May, Strategy sold Bitcoin for the first time in four years—32 BTC, about $2.5 million—to pay preferred stock dividends, but the news triggered a sell-off avalanche: Bitcoin fell below $65,000, dropping more than 14% over two trading days.

Both events point to a shared predicament for the DAT companies: once mNAV (market value / net value of holdings, i.e., how much the market is willing to pay per $1 worth of the company’s coins) falls below 1, the equity follow-on financing channel is effectively closed; dividends and debt become rigid expenditures; and the company can only sell coins to make payments—while selling coins further intensifies the sell pressure, forming a downward-spiral cycle. At present, Strategy and Bitmine’s mNAV are 0.82 and 0.80, respectively.

A SoSoValue researcher believes that this round’s Bitcoin cycle has been driven by two engines in succession: first, DAT companies borrowing to buy coins, and then continuous net inflows into spot ETFs. Now, both engines have stalled at the same time—according to the SoSoValue ETF dashboard and the coin stock dashboard: BTC spot ETFs have recorded net outflows for 12 consecutive days, with cumulative net outflows nearing $4 billion; ETH spot ETFs have recorded net outflows for 16 consecutive days, with cumulative net outflows of about $800 million; and the DAT camp led by Strategy and Bitmine has collectively fallen below mNAV. After both major sources of incremental funding have dried up, whether the crisis at DAT companies will form the bottom of this crypto cycle remains to be seen. (Source: ODAILY)