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1144 sats \ 3 replies \ @justin_shocknet 19h \ on: isn't TWENTY ONE just converting US government debt into Bitcoin? bitcoin
XXI is effectively owned by Tether, so it's has to be more than just copy pasta under another entity...
Microstrategy is pretty overt in that they're simply providing a wrapper for fixed income markets that need regular yield. If XXI ends up doing what tether already does maybe its a lower risk (in legacy fiat fixed income terms) than Strategy?
We don't really know exactly what "product" XXI is cooking up, all we know is that there will be some arb similar to Strategy with a Tether-esque synergy.
Maybe XXI is just a way to tap US equity markets and provides a wrapper for Tethers offshore assets in a world where offshore dollars are going to dry up? Its TradFi after all, so probably something that boring.
Important thing for individuals is that they don't touch any of this shit, and just buy coin directly... Only the fixed income funds are trapped, so let them have it. If you try to ride them like a meme stonk you're going to wish you just bought coin instead.
If XXI ends up doing what tether already does maybe its a lower risk (in legacy fiat fixed income terms) than Strategy?
It seems there is no risk to Twenty One. Tether is a pure-profit-engine, and they are buying Bitcoin with profit, not by issuing debt like Strategy. And because Tether props up US debt, the US gov won't do anything to mess with it.
The "threat" to the model is that countries start allowing their citizens to hold and use foreign currency, have foreign bank accounts, and that the governments stop debasing their currency and start strict austerity.
Is this "boring"? Maybe? Maybe it's just a highly profitable non-US company trying to dump its cash into Bitcoin. Maybe it's no more interesting than Tesla buying Bitcoin.
But the synergy is interesting. Is it a feedback loop or a self-correction mechanism? The bigger Tether gets, the lower it drives bonds yields; lower bond yields lead to risk-on investing and lower government interest expense, both inflationary. Lower bond yields reduce profit for Tether. Twenty One gains investors in the risk-on environment. Then does Bitcoin price increasing in fiat terms reduce trust in government debt, driving up yield?
I agree owning your own coins is safest, but I'd like to understand the macro picture.
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Highly profitable deserves an asterisk, they make a lot per employee and billions of dollars, but their return on equity isn't better than that of anyone else investing in treasuries... They're simply retaining the earnings in the form of Bitcoin, you could do that yourself with the yield from a moneymarket fund or any corporate that pays dividends or does buybacks.
The corporate structure introduces additional management risk beyond Bitcoin itself, plus speculative overpricing as the leverage ratio and cost isn't yet clear.
The macro is very interesting, just not the product. Monetizing treasuries with stablecoins while collateralizing Bitcoin seems to be the plan for getting the world off the broken dollar system without a humanitarian catastrophe. #897720
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Word! Let fixed income be the bag holders and pump Bitcoin for the rest of us while taking on the risk! If it goes side ways, just means temporary cheap sats for the plebs
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