They say “what’s new is what’s old” and Bitcoin treasury companies are new… but they’re also old. A Bitcoin treasury company is a publicly traded company that primarily holds bitcoin.
At a time when buying bitcoins was difficult, buying companies that bought it was easier. But you’re paying a premium for that easy.
Microstrategy is a company that’s viewed as a bitcoin treasury company because it does other things, most of it’s value is in the fact that it holds a massive number of bitcoins. And it’s market cap is greater than the value of its holdings, that difference is the premium you pay for MSTR.
The post below is part two of a series that looks at how this was all done before in the 1920s with “investment trusts.” (Part 1 discussed MicroStrategy)
Bitcoin TreasuryCos: Lessons From The 1929 Crash [Be Water] – “The explosive proliferation of Bitcoin treasury companies mirrors that of the 1920s investment trusts, and both gold rushes stem from a perfect storm of greed: intense investor demand for exposure to a scarce asset creates mNAV premiums that promoters rush to monetize. If Goldman Sachs could extract enormous profits from its trust in the 1920s, why couldn’t everyone else? If MicroStrategy can monetize its mNAV premium, why shouldn’t every other company follow suit?”
Until reading this, I forgot how short that period was when SPACs were all the rage and then disappeared in a whimper.