A senior Bitcoin Treasury official says the “excitement” surrounding Bitcoin stacking companies is starting to wear off, and investors are becoming more critical of Bitcoin Treasury companies.
Currently, there are 205 financial companies around the world that list Bitcoin (BTC). But that shine is starting to dim, and some companies that have adopted this strategy have seen their market net asset values (mNAV) plummet in recent months.
“The market is becoming more sophisticated and learning how to evaluate the differences between financial companies,” KindlyMD CEO David Bailey, who leads the company’s Bitcoin accumulation strategy, said in an interview with CNBC on Thursday.
Bitcoin government bonds need a launch and an “edge”
Mr Bailey said there was little reason for companies to launch unless they pursued a truly unique approach. “It’s like, what’s the advantage and why do we need you,” Bailey said.
“Whenever there is market euphoria, you see good companies outperforming, but you also see bad companies outperforming,” he said.
Bailey said the days of creating new Bitcoin treasury companies by closely following the strategies of public companies already in the market are over.
“There are plenty of companies that the market can tolerate doing exactly the same thing,” he said.
He outlined several ways these companies can stand out, from pursuing untapped international markets to specializing in specific asset categories, such as Michael Saylor’s credit market entry strategy, to acquiring and integrating operating businesses that generate stable income.
Bailey’s Bitcoin company Nakamoto Holdings completed its merger with healthcare company Kindly MD on August 14, forming a publicly traded Bitcoin treasury vehicle with plans to accumulate 1 million BTC.
KindlyMD stock has seen sharp price movements in recent weeks, plummeting 55% in one day to $1.22 on September 15 after Mr. Bailey warned short-term traders that the stock was likely to experience increased “price volatility.”
“We expect stock price volatility may increase over a period of time,” Bailey said in a letter to shareholders.
According to Google Finance, KindlyMD stock is trading at $0.76 at the time of publication.
There is debate whether Bitcoin government bonds are a bubble or not.
He said the market will soon see the strongest Bitcoin treasury companies enter the “next phase” and the industry will be in “healthy territory.”
According to BitcoinTreasuries.NET, the public Bitcoin treasury holds a total of $113.8 billion as of the publication of this article.
However, the mNAV of some Bitcoin government bonds has fallen sharply in recent months.
Standard Chartered warned on September 15 that the collapse of mNAV in several digital asset treasuries has left small businesses at further risk.
“We see market saturation as the main driver of recent mNAV compression,” Standard Chartered said.
Venture capital firm Breed said only a few Bitcoin treasury companies can withstand the test of time and avoid the vicious “death spiral” affecting Bitcoin holding companies trading near mNAV.
Related: Bitcoin traders fear the next sharp drop in BTC price at $102,000 as gold hits new highs
“His intuition is that the lifespan of Bitcoin financial strategies is much shorter than most expect,” James Cech, principal analyst at Glassnode, said on July 4.
“For many new entrants, that may already be over,” Cech added.
Meanwhile, Veronika Kapustina, CEO of TON Strategy, said that while all indicators point to a bubble, this points to a “new frontier in finance”.
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