Bitcoin fund company ProCap Financial has added to its portfolio of digital assets as it ramps up efforts to narrow the gap between share price and net asset value (NAV), emphasizing a strategy of focused capital allocation amid volatility in crypto and equity markets.
ProCap disclosed on Monday that it acquired 450 Bitcoin (BTC) during a market pullback, bringing its total assets to 5,457 BTC. The additional purchase also helped reduce the company’s average cost per coin.
At the same time, ProCap said it bought back 782,408 of its shares over the past 10 days at prices significantly below the calculated NAV per share, reducing the discount between market price and intrinsic value. Nasdaq shares were up 7.17% at $2.84 a share in late Monday morning trading, according to Yahoo Finance.
ProCap emerged as the Bitcoin financial services company last year, raising more than $750 million in seed funding before going public through a SPAC merger.
The combined moves show that ProCap is increasing its exposure to Bitcoin while trying to address the discount between its share price and the value of its underlying assets. Stock returns below NAV reduce the number of shares outstanding, which can increase NAV per share and reduce the discount if market conditions stabilize.
related to: Falling NAV on Bitcoin Treasurys creates a rare opportunity – 10x Research
NAV Compression Tests Bitcoin’s Treasury Model
Bitcoin treasury firms have come under pressure amid a months-long slump in the digital asset markets, which has led to widespread compression of the sector’s net asset value (NAV).
NAV represents the total value of a company’s assets – in this case, primarily Bitcoin holdings – minus liabilities divided by the number of shares outstanding. For Bitcoin treasury companies, investors often focus on multiple-NAV (mNAV), which compares the company’s market capitalization to the value of Bitcoin per share.
When mNAV is above 1.0, the company’s stock is trading at its net asset value; less than 1.0, they trade at a discount. According to BitcoinTreasuries.NET, ProCap’s mNAV is currently around 0.24.
However, some industry observers question whether mNAV fully captures the value of Bitcoin treasury companies. NYDIG head of research Greg Cipolaro argued that the traditional mNAV framework may be incomplete because it does not address operational businesses or strategic initiatives beyond holding digital assets.
related to: Crypto Biz: Revolt of Bitcoin Treasury Shareholders
