As Bitcoin-friendly treasury firms surge, experts warn of potential issues, branding many as speculative and unsustainable. Investors are concerned these companies may inflate their values through share sales, exposing them to significant risks. The sustainability of their model, largely reliant on Bitcoin’s price performance, is under scrutiny amid fears of a market bubble.
As Bitcoin continues to gain traction, a growing number of public companies are adopting Bitcoin-based treasury strategies, leading experts to raise concerns. Investor Stack Hodler recently vocalised his worries, branding these firms as merely speculative versions of more established cryptocurrencies, describing them as “this cycle’s shitcoins.” He argues these companies create shares from “thin air” solely to attract investors looking to beat Bitcoin’s performance, ultimately leading to potential failure. Hodler’s take is that many investors may end up with losses when the reality of holding shares in Bitcoin proxies sets in.
Hodler observes that while these companies may currently absorb speculative liquidity that might otherwise go to altcoins, he warns that their inevitable selling off of Bitcoin will cause chaos. He referred to their model as “Fiat shenanigans” which could collapse dramatically as investors wake up to the less efficient nature of merely holding equity in these firms instead of self-custodying Bitcoin. Hodler contrasts this with firms that create genuine economic value and buy Bitcoin with their profits, deeming this approach sustainable.
Stephan Livera, a Bitcoin podcaster, chimed in, citing MicroStrategy’s recent earnings call, where Michael Saylor defended its heightened valuation relative to its net asset value. Livera suggests there is a structural rationale for some treasury companies to exist, primarily due to the difficulty large investors have in holding Bitcoin directly—often owing to tax, regulation, or investment guidelines. Thus, if managed wisely, these firms might have a long-term role, even if cyclical premiums remain in play.
However, Hodler clarifies he’s less concerned about MicroStrategy and more about the sudden influx of copycat companies in the space. Similar to how lesser coins have capitalised on Bitcoin’s success, these treasury firms are trying to ride that wave, although Hodler is sceptical. He questions the sustainability of companies primarily focused on selling shares to fund Bitcoin purchases, suggesting that businesses producing profits and stacking Bitcoin are a healthier approach.
Opinions differ on the possible emergence of a new bubble. “This could be the next bubble,” warns Scott Melker of “The Wolf of All Streets” podcast, expressing concern about Bitcoin treasury companies that take on debt to acquire Bitcoin further. Market analyst Dave Weisberger warns against jumping to conclusions, stating that bubbles must first inflate; for now, he believes Bitcoin is not nearing that territory.
Technical expert FiboSwanny also points towards financial instruments surrounding Bitcoin as potential risk areas, including debt-funded treasury acquisitions and derivatives, distinguishing them from Bitcoin itself. However, Lark Davis sounded a more cautionary note, suggesting that the current leverage seen in companies’ altcoin investments might lead to a destructive unwind cycle reminiscent of past market bubbles.
Cory Klippsten, CEO of Swan Bitcoin, bluntly stated that the situation has “already jumped the shark.” It seems clear that while numerous companies now publicly hold Bitcoin, many are inflated in valuation without solid business foundations. Dominating the space remains MicroStrategy with its vast Bitcoin reserves, but firms like Japan’s Metaplanet, Semler Scientific, and KULR Technology are also making headlines as they shift their focus dramatically to Bitcoin wealth accumulation.
The question of viability is pressing, as most of these firms rely on issuing new shares at elevated prices to fund their Bitcoin purchases. While this cycle seems advantageous during a bull market, a downturn could lead to significant reversals. Hodler summed it up succinctly: “Bitcoin is the best risk-return asset to hold.” The future for these treasury-driven companies will likely hinge on how they navigate both their own corporate strategies and the volatile landscape of Bitcoin itself. As of now, Bitcoin is trading at $103,709, with uncertainty looming ahead.
