Bitcoin treasuries may struggle to match Strategy

Bitcoin treasury companies built primarily around buying the cryptocurrency may struggle to compete with Michael Saylor’s Strategy, according to economist and “The Bitcoin Standard” author Saifedean Ammous.

“I don’t see a compelling case for going to another Bitcoin treasury company other than Michael Saylor’s Strategy,” Ammous said on the latest episode of Cointelegraph’s Proof of Thesis.

Strategy holds the world’s largest corporate Bitcoin treasury, with 847,666 BTC acquired for $63.95 billion, according to its Monday 8-K filing. The company also reported a $5.02 billion US dollar reserve to cover preferred stock dividends and debt interest.

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Strategy’s size and cash reserves

Strategy’s larger Bitcoin holdings allow it to borrow at lower rates, giving it an advantage over smaller treasury companies, according to Ammous. He said previous drawdowns had not brought the company close to liquidation.

Strategy’s financing model came under the microscope over the summer as Bitcoin fell below $60,000 and the company’s STRC preferred stock traded far below its target price of $100.

Strategy raised STRC’s annual dividend rate to 12%, repurchased shares and built its cash reserve. It also sold some Bitcoin to help fund dividends and STRC repurchases before resuming its Bitcoin accumulation.

“Even a much bigger Bitcoin drawdown is going to leave them in a decent situation because they have enough cash on hand to make their payments,” Ammous said.

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Businesses with positive cash flow can put surplus cash into Bitcoin as a long-term reserve asset, Ammous said, adding that he expects more companies to adopt this model.

“I think pretty much every business should be doing this.”

He distinguished those reserves from cash needed for daily, weekly and monthly operations.

Ammous nevertheless cautioned that investing in Strategy carries risks and said he favors holding Bitcoin directly.

Bitcoin’s next peak could come in 2029

Bitcoin has probably already bottomed, although another crash could still take prices lower, Ammous said. He said Bitcoin’s next cycle may peak in 2029, with prices predominantly rising until then.

We may bottom again, we may witness another crash that takes us down.”

Smaller drawdowns could make Bitcoin more attractive to large asset managers as memories of previous bear markets fade, Ammous said.

Asked for a Bitcoin price estimate for 2030, Ammous put his best guess at roughly $200,000. He based that estimate on the Bitcoin power-law model, choosing a figure near the lower end of the range he cited.

“I wouldn’t bet on it,” he added.

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