...Trump Media bought some bitcoin

One theory of crypto treasury companies, which I write about a lot, is that the US stock market will pay $2 for $1 worth of crypto, so if you have a big pot of crypto, you should put it in a company and sell shares on the stock exchange, because then it will be worth more. This seems to me like a good plan for people who own a lot of crypto, and those people are constantly looking for small public companies to do this trade with.

The crypto treasury strategy solves this problem. What you do is:

1. Have the company sell stock, at high meme-y prices, to buy Bitcoin. (Unlike building a real business, buying Bitcoin is not especially hard.)
2. The stock won’t crash: Meme-stock shareholders don’t like dilution, but they do love Bitcoin, so selling stock to buy Bitcoin is fine. In fact, selling stock at a premium to buy Bitcoin is clearly accretive to existing shareholders (it’s “accretive dilution”), so they should have no complaints.

In a different context, I wrote about a crypto strategy of “(1) Ponzi, (2) acceptance, (3) diversification, (4) permanence,” and I think that has broad explanatory power. If people will buy your stuff for bad reasons, you should sell it to them and use the money to buy real assets, so that one day people will buy your stuff for good reasons.

This form of the crypto treasury strategy might not push up your stock price — because your stock price is already implausibly high — but that doesn’t matter. With this trade, you are perfectly happy to drive your stock’s premium to net asset value down to zero, as long as you’re doing so by increasing your net asset value (from, you know, zero to a large number).

The last estupidez of this cycle isn't in yet