Investors are becoming more discerning of Bitcoin treasury companies as the “euphoria” over Bitcoin-stacking firms is starting to wane, according to a Bitcoin treasury executive.
There are currently 205 publicly listed Bitcoin (BTC) treasury companies worldwide. But their sheen has started to dull, with several firms that have adopted the strategy seeing their market net asset values (mNAVs) plunge in recent months.
“The market’s getting more sophisticated, it’s learning how to assess what makes treasury companies different,” KindlyMD CEO David Bailey, who is leading the company’s Bitcoin accumulation strategy, said in an interview with CNBC on Thursday.
Bitcoin treasuries must have a need and ‘edge’ to launch
Bailey said that there’s little reason to launch unless a company pursues a truly unique approach. “It’s kind of like, what’s the edge? Why are you needed?” Bailey said.
“Anytime there is euphoria in the market, you see good companies come to bear and you also see not great companies come to bear,” he said.
Bailey said the days are over of new Bitcoin treasury companies following the exact playbook of public companies already in the market.
“There are so many companies that the market can bear doing the exact same thing,” he said.
He outlined several ways these firms can stand out, from pursuing untapped international markets to specializing in specific asset categories, such as Michael Saylor’s strategy of breaking into the credit market, or even acquiring and consolidating operating businesses that generate steady income.
Bailey’s Bitcoin firm, Nakamoto Holdings, completed its merger with healthcare company KindlyMD on Aug. 14, forming a publicly traded Bitcoin treasury vehicle with plans to accumulate 1 million BTC.
KindlyMD shares have seen sharp swings in recent weeks, plunging 55% to $1.22 in a single day on Sept. 15, after Bailey cautioned short-term traders that the stock was likely to face heightened “price volatility.”
“We expect share price volatility may increase for a period of time,” Bailey said in a shareholder letter.
At the time of publication, KindlyMD’s stock price is trading at $0.76, according to Google Finance.
There’s debate whether Bitcoin treasuries are a bubble
He said the market will see the strongest Bitcoin treasury companies enter “the next stage” in the near future, which will position the industry in a “healthy space.”
Public Bitcoin treasuries hold a total of $113.8 billion at the time of publication, according to BitcoinTreasuries.NET.
However, several Bitcoin treasuries have seen their mNAVs crater in recent months.
On Sept. 15, Standard Chartered warned that the collapse of several digital asset treasuries’ mNAVs now exposes smaller firms to more risks.
“We see market saturation as the main driver of recent mNAV compression,” Standard Chartered said.
VC firm Breed said that only a few Bitcoin treasury companies will stand the test of time and avoid the vicious “death spiral” that will impact BTC holding companies that trade close to the mNAV.
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Glassnode lead analyst James Check said on July 4, his “instinct is the Bitcoin treasury strategy has a far shorter lifespan than most expect.”
“For many new entrants, it could already be over,” Check added.
Meanwhile, TON Strategy CEO Veronika Kapustina said that while all the indicators suggest it is a bubble, it presents “a new segment of finance.”
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