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TD Cowen is initiating coverage on four crypto treasury firms – public companies that make it their job to buy and hold crypto to increase shareholder value. Almost a year ago, these companies were the newest mania in crypto at a time when investors were chasing returns during a bitcoin price slump. Dozens of companies rushed in positioning themselves as the next Strategy , and often beyond bitcoin and across a spectrum of crypto assets. To many, it was inevitable that most players wouldn’t last, but those that survived and succeeded would become compelling long-term opportunities for investors. Now, TD Cowen has identified four, saying the subsector “merits specific focus.” On Thursday it initiated coverage of Strive , Nakamoto Holdings , The Smarter Web Company (all bitcoin accumulators) and SharpLink (which invests in ether) – all with buy ratings. It also reiterated its buy rating on Strategy, the pioneer of the bitcoin accumulation strategy. “These companies best represent a nascent industry sector, with operating activities that add meaningful value to investors as well as their respective underlying digital asset ecosystems,” analyst Lance Vitanza said in the note. “We believe the sector is likely here to stay and could command increasing investor attention over time.” Each of the stocks is down more than 50% in the past six months amid the macro-driven downturn in crypto asset prices. Investors anticipate prices will recover, however, an expectation supported by signals of institutional appetite for crypto, such as Morgan Stanley launching its own bitcoin ETF, MSBT , this week. TD Cowen sees more than 100% upside potential in Strive and SharpLink, about 200% in Smarter Web and more than 300% in Nakamoto. Compared to exposure through spot or ETF holdings, there’s amplified upside potential in treasury companies, according to the firm. They grow the amount of crypto held per share over time, utilize institutional leverage that individual investors typically can’t access, reinvest operating cash flows back into the business and take advantage of self-reinforcing growth loops (also known as the “flywheel effect”). “Digital assets are transitioning from speculative instruments into foundational components of the global financial system,” Vitanza said, with bitcoin as digital gold and ether as digital picks and shovels that could facilitate the tokenization of $100 trillion of financial assets. “Rather than viewing bitcoin and [ether] exposure solely through either spot holdings or exchange-traded products (ETPs), we argue that well-run [digital asset treasury companies] may deliver superior long-term exposure.” —CNBC’s Michael Bloom contributed reporting.
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