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Merely a handful of Bitcoin (BTC) treasury firms will endure the challenges of time and evade the harsh “death spiral” that will affect BTC holding enterprises trading near net asset value (NAV), which is the total assets of a business entity minus its liabilities, as per a report from venture capital (VC) firm Breed.
The viability of Bitcoin treasury firms relies on their capability to attain a multiple of their net asset value (MNAV), the authors indicated.
Breed’s report delineated the seven stages of a BTC treasury firm’s downfall, commencing with a decrease in Bitcoin’s price that instigates a fall in MNAV, causing the company’s share price to approach its actual NAV.
This, in turn, complicates the ability of BTC holding firms to acquire the debt and equity financing essential for the asymmetric trade of transforming the inflationary US dollar into a capped appreciating asset.
As the availability of credit diminishes and debt maturity approaches, margin calls are instigated, compelling the firms to liquidate BTC into the market, further depressing the BTC price and initiating a consolidation of holding companies acquired by more robust firms, potentially resulting in a prolonged market-wide downturn. The authors of the report noted:
“In the end, only a limited number of companies will maintain a lasting MNAV premium. They will achieve this through robust leadership, disciplined execution, astute marketing, and innovative strategies that persistently enhance Bitcoin-per-share regardless of broader market variations.”
This death spiral could usher in the next crypto bear market. Nonetheless, the report’s authors mentioned that as most BTC treasury firms currently fund their acquisitions with equity rather than debt, the collapse may be limited.
Equity-based funding mitigates the impact on the larger market, the authors stated. Regardless, the current outlook could shift if debt financing surpasses equity as the preferred choice.
Related: Michael Saylor’s Strategy premium is not ‘unreasonable’: Adam Back
Bitcoin treasury firms become a major trend in 2025
Michael Saylor’s enterprise, Strategy, has been acquiring Bitcoin since 2020 and popularized the BTC corporate treasury concept, which has gained considerable traction over the past two years.
Over 250 entities now hold Bitcoin, including corporations, governmental organizations, exchange-traded funds (ETFs), pension funds, and digital asset service providers, according to BitcoinTreasuries.
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