Experts believe that simply acquiring and holding Bitcoin is no longer enough for Bitcoin treasury firms looking to emulate Strategy’s success.
Deep disillusionment goes beyond Bitcoin price volatility
A Bitcoin treasury firm’s high-risk strategy that attempts to replicate the success of pioneer strategies has failed to launch, and huge investor losses show that this model is not an easy recipe for huge profits. Over the past three months, investor capital in BTC copycat companies has been eroded by severe capital outflows.
Importantly, these stock market crashes began well before Bitcoin’s recent volatility, with Bitcoin fluctuating from $126,000 on October 6th to just under $105,000 by October 17th. This suggests that the negative sentiment is not only due to the latest BTC correction, but also deeper market disillusionment.
The divergence in performance and deteriorating investor sentiment shows that simply acquiring and holding Bitcoin is no longer enough. Strategy’s first-mover advantage was based on unique timing, access to institutions, and CEO Michael Saylor’s relentless promotion, factors that new entrants could not easily imitate.
However, some experts believe that the discounted prices at which many BTC government bond companies trade are due to structural and governance flaws that undermine investor confidence. They point out that due to high operating costs, low liquidity, and poor capital discipline, these companies’ stock prices often fall relative to their Bitcoin holdings. Many also argue that these companies have insufficient returns and no compelling strategic value to offset the additional layer of corporate risk.
Some, like Brian Trepanier, founder and president of On Demand Trading, believe the market is punishing hype and poor execution. “The market is punishing poor execution, weak governance, and lack of transparency. When a company relies entirely on market hype and does not present an actual business plan, investors end up treating the company as speculation rather than value,” he said.
Dilution Trap and Strategic Debt Model
Unlike many BTC companies, which raise capital through stock issuances and dilute shareholders, Strategy used convertible bonds to maintain capital and attracted investors’ attention as a reliable BTC agent. Meanwhile, Trepagnier argues that the current approach of issuing preferred stock without a clear path to value shows more desperation than strategy. “Markets will not be fooled by financial gymnastics, especially when Bitcoin exposure can be more cleanly replicated through ETFs,” he said.
Mete AI, founder of ICB Verse, agreed, saying, “The market is interpreting that as desperation rather than conviction. As a result, dilution risk increases faster than BTC’s appreciation, eroding long-term shareholder value.” He advises investors to focus on metrics such as the BTC-backed liquidity ratio, which measures a company’s ability to cover 12 to 18 months of expenses without selling Bitcoin.
Still, some experts attribute Strategy’s success to luck, first-mover advantage and the reputation of founder Michael Saylor. Ambire CEO Ivo Georgiev said it would have been difficult to replicate Strategy’s accomplishments without Saylor’s “hero” story.
While it’s not impossible to copy Strategies’ model, experts like Trépanier believe the possibilities are narrowing. Success requires good governance and a true long-term vision. Mete AI further adds, “Next-generation treasury firms need to go beyond simply emulating Strategy’s financial engineering to blend Web3 strategy with asset management disciplines.”
FAQ
- Why is BTC Treasury Company Trading at a Discount? These companies trade at a discount due to poor governance, high operating costs, and a lack of transparency that undermines investor confidence.
- Is simply holding Bitcoin a good business strategy? No, experts agree that simply owning Bitcoin is an outdated model and is not enough to create company value today.
- What should the next generation of finance companies do? Future success requires integrating BTC reserves with real-world utilities such as payment networks to generate productive yield and strategic value.
- Why did the strategy succeed when other strategies failed? The strategy benefited from unique first-mover timing and convertible debt financing choices, avoiding the equity dilution that currently hurts copycat companies.
