Investors are becoming increasingly selective regarding Bitcoin treasury companies as the initial excitement over Bitcoin-stacking firms begins to diminish, as noted by a Bitcoin treasury executive.
Currently, there are 205 publicly listed Bitcoin (BTC) treasury companies globally. However, their appeal has started to fade, with numerous firms adopting this strategy witnessing significant declines in their market net asset values (mNAVs) in recent months.
“The market is evolving; it’s learning how to evaluate what differentiates treasury companies,” said KindlyMD CEO David Bailey, who is spearheading the company’s Bitcoin acquisition strategy, in an interview with CNBC on Thursday.
Distinctiveness and Need for Bitcoin Treasuries
Bailey remarked that launching a new company requires a truly distinctive approach. “What’s the edge? What is your necessity?” he inquired.
“Whenever market euphoria occurs, both strong and weak companies emerge,” he explained.
He indicated that the era of new Bitcoin treasury companies merely replicating the strategies of existing public companies is over.
“There are far too many companies that can sustain doing the same thing,” he pointed out.
Bailey suggested several ways for these firms to differentiate themselves, including entering underserved international markets or focusing on specific asset categories, like Michael Saylor’s approach to breaking into the credit market or even acquiring and consolidating businesses that provide consistent revenue.
On August 14, Bailey’s Bitcoin firm, Nakamoto Holdings, successfully merged with healthcare company KindlyMD, creating a publicly traded Bitcoin treasury vehicle aiming to accumulate 1 million BTC.
Recently, KindlyMD shares have experienced volatile fluctuations, plunging 55% to $1.22 in a single day on September 15, following Bailey’s warning to short-term traders about potential “price volatility.”
“We anticipate increased share price volatility for some time,” Bailey stated in a letter to shareholders.
As of publication, KindlyMD’s stock price is trading at $0.76, according to Google Finance.
Debate Over the Viability of Bitcoin Treasuries
Bailey shared that the market will witness the emergence of the strongest Bitcoin treasury companies reaching “the next stage” soon, which will position the sector in a “healthy state.”
As of publication, public Bitcoin treasuries collectively hold $113.8 billion, according to BitcoinTreasuries.NET.
However, numerous Bitcoin treasuries have witnessed declines in their mNAVs recently.
On September 15, Standard Chartered cautioned that the downturn of several digital asset treasuries’ mNAVs has exposed smaller firms to heightened risks.
“We attribute market saturation as the primary factor for recent mNAV compression,” Standard Chartered noted.
Venture capital firm Breed forecasted that only a handful of Bitcoin treasury companies will endure and avoid the detrimental “death spiral” threatening BTC holding companies trading near the mNAV.
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Glassnode lead analyst James Check expressed on July 4 that his “instinct is that the Bitcoin treasury strategy may not last as long as many predict.”
“For numerous new entrants, it might be over already,” Check added.
Meanwhile, TON Strategy CEO Veronika Kapustina remarked that while all signs indicate a bubble, it constitutes “a new segment of finance.”
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