Investors are sharpening their ability to evaluate Bitcoin treasury companies as the initial excitement around these firms begins to fade, as noted by a leading Bitcoin treasury executive.
There are currently 205 publicly traded Bitcoin (BTC) treasury companies globally. Nonetheless, the allure of these companies has diminished, with many experiencing significant declines in their market net asset values (mNAVs) in recent months.
“The market is becoming more sophisticated; it is learning how to evaluate the distinctions among treasury companies,” David Bailey, the CEO of KindlyMD—which is implementing a Bitcoin accumulation strategy—stated during a CNBC interview.
Unique Edge Required for Bitcoin Treasuries
Bailey emphasized that there is little incentive to create a Bitcoin treasury unless the firm adopts a distinctive strategy. “What’s the edge? Why are you needed?” Bailey remarked.
He continued, “Whenever there’s market excitement, you see reliable firms emerge alongside less trustworthy ones.”
Currently, numerous companies are attempting to enter the market by following similar models as existing public companies.
“The market can only sustain so many firms offering the same services,” he noted.
Bailey proposed various methods such companies could differentiate themselves, such as targeting untapped markets internationally or focusing on specialized asset categories, exemplified by Michael Saylor’s recent venture into credit markets, or consolidating businesses that provide consistent revenues.
Bailey’s own Bitcoin enterprise, Nakamoto Holdings, recently finalized its merger with KindlyMD on August 14, creating a publicly traded vehicle aimed at accumulating one million BTC.
Bitcoin is down 9.90% over the past seven days. Source: CoinMarketCap
In recent weeks, KindlyMD’s stock has seen dramatic fluctuations, dropping 55% in a single day to $1.22 on September 15, after Bailey alerted short-term investors about expected “price volatility.”
As of now, KindlyMD shares are trading at $0.76, according to Google Finance.
Bubble Concerns in Bitcoin Treasuries
Bailey believes that only the most robust Bitcoin treasury companies will evolve to the next stage soon, potentially leading to a healthier market environment.
At the time of writing, the collective value of public Bitcoin treasuries amounts to $113.8 billion, as reported by BitcoinTreasuries.NET. However, several of these treasuries have faced severe declines in their mNAVs recently.
On September 15, Standard Chartered warned that the sharp decrease in several digital asset treasuries’ mNAVs poses greater risks for smaller firms. They indicated that market saturation has been a significant factor driving the recent mNAV reductions.
Furthermore, Breed, a venture capital firm, suggested only a limited number of Bitcoin treasury companies will endure the tough market, which could result in chaotic downturns for BTC-holding firms trading near their mNAVs.
James Check, the lead analyst at Glassnode, mentioned on July 4 that he believes the lifespan of Bitcoin treasury strategies may be shorter than anticipated. “For many newcomers, it could already be the end,” he added.
Meanwhile, Veronika Kapustina, CEO of TON Strategy, expressed that despite signs of a potential bubble, this movement represents a novel area in finance.
