We're back for our DUE DILIGENCE: My sacred task of covering BTCTCs in mainstream media...
The FT has a Big Read today... on companies piling into bitcoin
Alas, Den is here, reporting for duty.
...psst, the "experts" can, as usual, go fuck themselves.
We start with some nice explainers:
The premium investors are willing to pay underlines the value they believe lies in these crypto-owning companies. Companies that prove they are committed to continue raising money to buy crypto are rewarded by investors, who value the company’s shares more highly than the value of the bitcoin they hold. To actually buy the tokens, companies typically raise debt or equity and plough that money into buying crypto through an exchange such as Coinbase. “bitcoin per share”, or how many bitcoins they hold per share of the company, is the metric of success. If the company buys more tokens quickly, the equity investors therefore indirectly hold more crypto per share of the company they own — a reason why investors are paying premiums early on, in the hope of cashing in on more bitcoins per share in the future.
THeeeen:
Saylor’s software company-turned-bitcoin-hoarder Strategy is now valued at about $115bn, nearly double the value of the bitcoin it holds, as investors pile in.
mNAV is about 1.5 these days, (114bn market cap vs 73bn worth of bitcoin); "nearly" is doing a heavy lifting in this sentence.
Then we go haywire:
Companies that are taking on billions of dollars in debt to fund their purchases could quickly find themselves unable to repay creditors.
pretty big misunderstanding... the small, penny-stock type companies can't access debt on any reasonable terms, and the big ones like Strategy or Metaplanet isn't doing that... so I ask again, HOW are these companies going to collapse?
Answer: bitcoin falls apart.
Correct. But I mean, guys, nobody sane really believes that, huh.
And for Strategy, not even a -80% bear market in bitcoin for MONTHS will do anything to topple the company.
AAAAND we're back with trump-derangement-syndrome: (#969515)
The emphasis on Trump is a tad disgusting... I mean, do these people SERIOUSLY believe that all of this is an orange-man pump...? There's no underlying reason, to inflation protection, no dying of the dollar, no TINA for capital markets...?
OK, from a tradi perspective, it makes sense that all of this is just THE SAME sort of insanity:
ReserveOne is a $1bn deal funded by investors including exchanges Kraken and Blockchain.com, which plans to buy bitcoin as well as other crypto tokens ether and solana. The Ether Machine raised $1.5bn, which it plans to spend on ether. Former Barclays chief executive Bob Diamond raised $888mn in a Spac deal with a biotech company to buy HYPE tokens. The venture business of crypto billionaire Changpeng Zhao led a $500mn deal for a Canadian vape maker to buy BNB, the token of the Binance exchange Zhao co-founded.
newsflash: shitcoin ≠ bitcoin. Stop talking about "crypto."
"any doubt this trend will be long-lived. The rapid growth already has some investors concerned about over saturation."
Absolutely correct.
We get some nice explanations of the rationales:
In countries like the UK and Japan, crypto ETFs have been banned, as regulators try to shield investors from the risk of volatility in digital assets. Therefore, treasury companies act as a proxy, giving investors indirect access to crypto via a vehicle that they are allowed to trade.
Investors are also exploiting a tax arbitrage that exists in some countries between holding crypto assets and stocks. In Japan, gains from crypto holdings are taxed as high as 55 per cent, while stocks are taxed at 20 per cent. In Brazil, crypto gains are taxed at 17.5 per cent while shares trading on the country’s stock exchange are taxed at 15 per cent.
“My main problem with this strategy is that I don’t really understand where it ends,” adds Benoist. “The company is in a loop where it has to continually feed that loop with additional purchases, go back to the market to purchase more — this cycle has to continue to justify the premium.”
It ends, said Pierre Rochard elegantly in his debate with Jim Chanos, when fiat money no longer buys anything, and nobody will accept it in trade.
HAPPY READING, STACKERS!
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