According to Glassnode’s lead analyst, James Check, the strategy of a Bitcoin Treasury might potentially be a transient trend, in contrast to what many assume. Based on his analysis, Check points out that there’s a considerable chance of an early saturation for new firms entering the Bitcoin industry given the surrounding circumstances.
The Fate of New Entrants in Bitcoin Investment
Check’s perspective contends that the ‘Bitcoin Treasury Strategy’ might have a shorter run than public expectation. In an analysis report, he stated that for many new entrants, the initial upside might already be over. Rather than simple numerical comparisons of Bitcoin treasury assets, Check emphasized the importance of evaluating firms’ sustainability, focusing on their product strategies and the viability of long-term Bitcoin accumulation.
New Firms vs. Early Birds
According to Check, it’s becoming an arduous task for newer Bitcoin treasury firms to make their mark, owing to the market’s inclination towards the early adopters. His statement, “Nobody wants the 50th Treasury company,” implies that the investors are gravitating more towards the original Bitcoin Treasury players.
In the past month, at least 21 establishments declared Bitcoin as a reserve asset, as per BitcoinTreasuries’ data. Amongst them, Michael Saylor’s Strategy, the most sizable public Bitcoin treasury, owns 597,325 BTC. The second biggest is MARA Holdings, holding only a twelfth of the Strategy’s Bitcoin reserves, which accounts to 50,000 BTC.
The Struggles of Startup Bitcoin Treasury Firms
Despite the challenges new firms could face, Check recognizes the potential that Bitcoin Treasury startups have in attracting retail speculators. The flipside, however, is these speculators are not inclined to invest indefinitely. Furthermore, drawing a definitive timeline for the downturn of these startups presents a predicament for analysts like Check, who holds a bullish outlook on Bitcoin’s trading value. Currently trading at $107,990, Bitcoin’s value is around 3.70% short of its all-time high of $111,970.
Bitcoin Treasury Strategy: A Double-edged Sword?
Check agreed with Udi Wizardheimer, the co-founder of Taproot Wizards, in observing some companies’ Bitcoin Treasury Strategy as a means to profit quickly, without a complete understanding of its long-term purposes. As per Wizardheimer’s point of view, some entities perceive it as a sure-fire way to make a quick profit, without fully understanding the intricacies of the market they’re entering especially when they’re raising funds.
The Future of Bitcoin Treasury Firms
There have been increasing debates recently regarding the adoption of a Bitcoin Treasury strategy. Venture capital firm Breed previously pointed out in a report that only a handful of Bitcoin treasury firms could weather the test of time and avoid a presumptive “death spiral” that might affect BTC holding firms trading near net asset value (NAV).
Several industry bigwigs have raised concerns about new firms trying to establish Bitcoin banks without proper safeguards or risk management in place. If these smaller firms failed, it could potentially spark a ripple effect that could tarnish Bitcoin’s reputation.
Overall, the future of Bitcoin treasury strategy hangs in the balance. While there are opportunities for firms to profit, understanding the risks and managing them effectively is critical for sustainability, much to the agreement of Check himself.
