dge comes from being a pioneer in Canada, running a specialist arbitrage operation and keeping its costs reasonable. The downside is that it remains relatively weak and competition from global financial institutions could continue to intensify.
Recent performances
DEFT shares have fallen approximately 69.9% over the past year, from $3.16 on January 21, 2025 to $0.95 on January 20, 2026. Over the same period, the S&P 500 has gained 15.4%.
The gap boils down to a broad downturn in the shrinking crypto market assets under management (AUM) and fee income, i.e. 20% year over year income decline in the third quarter of 2025 and sharp drop in forecasts for the whole year. This forecast reset triggered a sharp sell-off following the November earnings release.
Fundamental Analysis
Growth prospects
DeFi Technologies grew rapidly in 2024: revenue grew from $7.84 million to $38.37 million year-over-year. Trailing twelve month revenue reached $68.39 million in January 2026.
But the pace did not hold. Third-quarter 2025 revenue fell to $22.5 million, compared to $28.1 million in the third quarter of 2024. Management also reduced its full-year 2025 guidance from $218.6 million to $116.6 million, citing arbitrage spread compression and competitive pressure.
Looking ahead, the growth plan is clear: expand ETP offerings into new jurisdictions (US, Europe), launch new DeFi investment products, benefit from higher staking and lending yields as digital assets mature, and capture new flows if crypto markets recover.
Quality and moats
The balance sheet is a great support. DeFi has $124.93 million in cash and $16.05 million in debt, so it is in a net cash position. This gives the company flexibility and some downside protection.
Operationally, the exclusive arbitrage office and partnerships with staking providers give it a niche advantage. Yet pricing power is not guaranteed: large asset managers and emerging digital treasury companies could exert pressure margins over time.
Leadership also seems stable. Co-founder Johan Wattenström becomes CEO, a sign of continuity and experience over multiple crypto cycles. The trade-off is that profitability (operating margin, ROE, ROIC) can vary significantly, as results are closely linked to the price movement of digital assets.
Assessment
DEFT looks cheap on one lens and not so cheap on another. The shares trade at a forward P/E of 8.2x, down from a multiple near 50x. On salesit trades at an implied EV/Sales close to 6x, compared to peer EV/Sales averages around 4.5x.
This “discount” reflects market valuation in uncertainty: revenue consistency is still in question and regulation remains a wild card. If cryptocurrency prices stabilize and assets under management start to grow again, the action could approach the multiples of its peers.
Market Sentiment
The sentiment on the street is optimistic. The analyst consensus is a Strong Buy, with a price target of $5.17, implying an upside of around 450%.
The positioning is more mixed. Short interest stands at 6.98% of the float, up 3.5% month-over-month, showing that some investors are bearish. The ownership is still predominantly commercial, with limited institutional participation.
Management also showed some conviction: the company repurchased 935,900 shares (about $2.4 million) in the third quarter of 2025.
Main risks
- Regulatory risk: Increased scrutiny or bans on DeFi and crypto products could restrict offerings, increase compliance costs or delay approvals.
- Crypto Market Volatility: Revenue and asset growth are highly correlated with digital asset prices; a prolonged bear market could further decline assets under management and fees.
- Competitive pressure: Major asset managers entering the crypto ETP space could leverage scale and distribution to capture market share.
- Execution risk: Success depends on maintaining arbitrage spreads and launching new products; missteps could stunt growth.
- High operating leverage: Zero financial leverage (net debt/EBITDA = 0) reduces balance sheet risk but amplifies earnings and stock price volatility significantly.beta business.
Bull case
- Rebound in crypto markets: A sustained rise in DeFi token prices could lead to rapid inflows of assets under management, increasing management fees and staking revenues.
- Entering the American market: SEC approval of US DeFi ETPs would open up a large addressable market and diversify revenue streams.
- Attractive valuation: A single-digit forward P/E and lower EV/Sales multiple than peers could attract value investors ahead of a rerating.
- Strong cash position: Net cash provides an runway for new product development, marketing initiatives and opportunistic acquisitions.
- Arbitration office on the rise: Improving trading spreads or expanding arbitrage strategies could significantly increase trading commission revenue.
Bear case
- Prolonged crypto slowdown: Further declines in digital asset markets would erode assets under management and fee-based revenue.
- Regulatory crackdown: Tighter rules or restrictions on DeFi products could reduce distribution and increase legal risk.
- Margin compression: Competition from digital treasury companies and broader entrants could reduce arbitrage spreads and management fees.
- Product launch delays: A failure or delay in the launch of new ETPs, particularly in the United States or Europe, would limit growth opportunities.
- Dilution by capital increase: A need for equity financing at depressed prices could dilute existing shareholders and weaken confidence.
On our radar
- Results for the 4th quarter of 2025: February 13, 2026: Annual and fourth quarter results, as well as forecasts for 2026.
- SEC Crypto ETP Rulemaking:H1 2026: Potential new rules on crypto ETP approvals impacting US product launches.
- Consensus Conference 2026: May 2026: Management can present a product pipeline and strategic roadmap.
- Assets under management milestones: Ongoing: Quarterly updates of assets under management to assess fund flows to DeFi ETPs.
Investment Conclusion
DEFT provides leveraged exposure to a potential upswing in decentralized finance adoption. You get this at depressed multiples, with a solid liquidity cushion and niche arbitrage capabilities in the mix.
But it’s not a fluid composition. Earnings are still very volatile and are heavily tied to crypto market sentiment and what regulators will do next.
Long-term investors who can stomach high-beta names tied to digital assets may see DEFT as an attractive opportunity, especially if upcoming earnings show the company is stabilizing. More risk-averse investors may be better off waiting for clearer evidence of sustained growth in assets under management and improved regulatory clarity before increasing their exposure.
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