A Bitcoin treasury executive stated that as the "frenzy" surrounding Bitcoin treasury companies begins to fade, investors are becoming more discerning about these companies.
Currently, there are 205 publicly listed Bitcoin treasury companies worldwide. However, their luster has started to dim, with several companies adopting this strategy seeing their market net asset value (mNAV) plummet in recent months.
"The market is becoming more mature and is learning how to assess the differentiating factors of treasury companies," said David Bailey, CEO of KindlyMD, who is leading the company's Bitcoin accumulation strategy, in an interview with CNBC on Thursday.
Bailey stated that there is little reason to launch unless a company adopts a truly unique approach. "It's like, what is the advantage? Why do we need you?" Bailey said.
"Whenever there is a frenzy in the market, you will see good companies emerge, but you will also see less favorable companies," he said.
Bailey indicated that the era of new Bitcoin treasury companies completely copying the script of existing public companies is over.
"The number of companies that can do exactly the same thing is limited," he said.
He outlined several ways these companies can stand out, from exploring untapped international markets to focusing on specific asset classes, such as Michael Saylor's strategy of entering the credit market, or even acquiring and integrating operating businesses that generate stable income.
Bailey's Bitcoin company, Nakamoto Holdings, completed its merger with healthcare company KindlyMD on August 14, forming a publicly traded Bitcoin treasury vehicle that plans to accumulate 1 million BTC.
KindlyMD's stock has experienced significant volatility in recent weeks, plummeting 55% to $1.22 on September 15, after Bailey warned short-term traders that the stock might face higher "price volatility."
"We expect stock price volatility may increase for a while," Bailey stated in a letter to shareholders.
As of the time of writing, according to Google Finance data, KindlyMD's stock price is $0.76.
He mentioned that the market will soon see the strongest Bitcoin treasury companies enter the "next phase," which will put the industry in a "healthy state."
According to data from BitcoinTreasuries.NET, as of the time of writing, publicly listed Bitcoin treasuries hold a total of $113.8 billion.
However, several Bitcoin treasuries have seen their mNAV plummet in recent months.
On September 15, Standard Chartered Bank warned that the collapse of mNAV for several digital asset treasuries now poses greater risks for smaller companies.
"We believe market saturation is the main driver of recent mNAV compression," stated Standard Chartered Bank.
Venture capital firm Breed noted that only a few Bitcoin treasury companies can withstand the test of time and avoid the vicious "death spiral" affecting BTC-holding companies close to mNAV trading.
Glassnode's chief analyst, James Check, stated on July 4 that his "intuition is that the lifespan of Bitcoin treasury strategies is much shorter than most people expect."
"For many newcomers, it may already be over," Check added.
Meanwhile, TON Strategy CEO Veronika Kapustina stated that while all indicators suggest this is a bubble, it presents a "new segment of finance."
Related: SEC Chair: The U.S. is 10 years behind in the crypto space, addressing this issue is a "top priority"
Original article: “David Bailey: Investors are becoming increasingly adept at identifying poor Bitcoin (BTC) treasuries”
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