What if we are wrong about Bitcoin treasury companies being net-positive?

Who sincerely believes they are? That would be a flawed judgment!

Make no mistake, the reason they are not net-positive has nothing to do with pride actions.

The reality is that they are not meant to be net-positive, especially in the long-term. This is a particularly difficult topic for most, but it generally isn't as bad as it seems, provided we can individually analyze these situations and make investment decisions based on our goals.

Bitcoin is now heavily tied to the debt crippled fiat system through rising treasuries by countries and centralized companies, and this is only going to keep growing. This is because even though these institutions believe Bitcoin to be worth the risk of allocating business reserve capital, the strategy remains fixated on growing their wealth in USD.

Everything still gets priced in the United States dollar at the end of the day. So it matters little how much Bitcoin grows, what institutions are constantly looking at is how much influence this gives them on accessing fiat liquidity.

But let's take it from the top again, what if we are wrong about Bitcoin treasury companies being net-positive?

Being net-positive generally means that one's overall impact is more outwardly beneficial than harmful and one can understand that the reverse of this, which is being net-negative, would mean generally being harmful.

Yet, one thing that's often overlooked when exploring these terms and the events they represent is that being outwardly beneficial in the case of staying net-positive directly means that the personal ROIs of said net-positive parties will be low, so a net-negative scenario would mean much higher personal returns on investments (ROIs).

So if you were a business, which would you gun for?

Contributing to more outward benefits at a direct cost to yourself?

Or

Strategize for maximizing profits through your investments?

Unless you're insane, the strategy at play will always be about personal gains, and that translates to a net-negative for the industry.

But of course, what we can't tell is the timeframe to which any of this materializes.

What Bitcoin treasury companies do don't really matter

It doesn't matter because the outcome of growing bitcoin treasury companies don't pose investment risks, it poses a risk of takeover, yet most are fixated on a potential price collapse if these companies debt go out of hand, something unlikely to happen.

A while ago I cake across this:

INTEL: Vivek Ramaswamy’s firm Strive has raised $750 million to build a Bitcoin treasury, with plans to acquire Mt. Gox Bitcoin claims and pursue strategies aimed at outperforming $BTC — X source

Also, Strategy yesterday announced the launch of $STRD ("Stride"), a new perpetual preferred stock offering to buy more Bitcoin.

Strategy, formerly MicroStrategy, plans to raise $250 million through an initial public offering of a new class of perpetual preferred stock so it can fund more Bitcoin purchases.

Strategy intends to issue 2.5 million shares of its 10% Series A Perpetual Stride Preferred Stock, with the ticker STRD, at $100 a share, the Bitcoin-stacking firm said in a June 2 statement.

Proceeds from the offering will be used to acquire additional Bitcoin
BTC and provide working capital, it added.

The interesting part:

Perpetual preferred stocks often pay fixed dividends indefinitely, with no maturity date and typically have priority over common stock in payouts. — Cointelegraph report

Ahhh, yes, the popular yield payment strategy, good thing we have likewise, a common question to ask:

Where does the yield come from?

I can't tell you that, but what I can tell you is that it doesn't matter. It could come from market manipulation or quite simply more debt creation and at that point we would have a Ponzi scheme, comical right?

If you want exposure to Strategy, it's one you to individually analyze the risk involved. And if you're buying Bitcoin because of Strategy, you might want to reevaluate your reasons.

If it's about making money, by all means, do it, you will in fact make money buying bitcoin.

Strategy and every bitcoin treasury companies out there is going to do what they have to do to maximize profits. Some will sell to realize this, most might do this in a non-direct way yet whilst everyone is worried about what will happen if they sell, there's something far more dangerous.

Continuous purchase.

The net-negative scenario plays in as more USD-debt gets created to buy Bitcoin. They will have most of its supply and essentially turn Bitcoin into a private asset market.

The net-negative in the long-term isn't even going to be about individual investors losing money by buying bitcoin. It will be about losing bitcoin itself. When institutions control most of the supply, TXs will go off-chain, so all new financial systems built atop bitcoin will be based on centralized derivatives.

But how are we sure that these companies can get to this point of leverage?

I think it's to be expected with that much BTC liquidity, these companies can do about anything to keep their debt obligations healthy and continually raise more money for expansion.

As a bitcoin investor, you should expect profits, but eventually, you're going to take those profits and that's where everyone losses.

It's more likely a question of when than if this will happen.

The only way to save bitcoin is to hold bitcoin.

Posted Using INLEO