Bits + Bips: How Bitcoin Treasuries Are and Aren't Like the SPAC Bubble - Ep. 845
🎯 Summary
Bits + Bips: How Bitcoin Treasuries Are and Aren’t Like the SPAC Bubble - Ep. 845: Comprehensive Summary
This episode of Bits + Bips dives deep into the burgeoning trend of public companies adopting Bitcoin as a treasury reserve asset, drawing direct parallels and crucial distinctions between this phenomenon and the 2021 SPAC (Special Purpose Acquisition Company) bubble. The discussion is framed against the backdrop of the recent Bitcoin conference in Las Vegas.
1. Focus Area
The primary focus is the Corporate Bitcoin Treasury Trend, analyzing its structure, potential risks, and comparison to historical speculative bubbles (specifically SPACs). Secondary topics include the political climate surrounding Bitcoin, the maturation of the Bitcoin conference, and the emerging infrastructure for Bitcoin yield/lending.
2. Key Technical Insights
- Bitcoin Yield Mechanism: The primary way to earn “true yield” on Bitcoin remains lending it out, as opposed to staking (which applies to PoS assets like ETH). Strategies like covered calls exist but carry risks like asset call-away.
- Leverage Infrastructure Growth: The rapid proliferation of institutional and retail lending platforms (like Strike launching Bitcoin borrowing) indicates that the infrastructure for leveraging Bitcoin collateral is rapidly coming online.
- MicroStrategy Flywheel: Michael Saylor’s strategy is noted for its unique “flywheel effect,” particularly his innovative use of debt issuance (e.g., perpetual preferred offerings) to fund further Bitcoin accumulation, a structure distinct from simple balance sheet additions.
3. Market/Investment Angle
- Bubble Comparison: The current treasury trend is deemed a global phenomenon (unlike the US-centric SPAC boom) and could potentially last longer, though many individual investments are viewed as speculative.
- “Copycat” Risk: The ease of cloning the MicroStrategy playbook means many new entrants lack genuine economic value creation beyond simply holding BTC, reminiscent of companies adding “blockchain” to their name for a stock bump.
- Distressed Asset Opportunity: The hosts suggest that the current environment is ideal for raising capital for a distressed fund vehicle, anticipating that many over-leveraged or struggling companies holding Bitcoin will eventually be forced to sell their crypto at significant losses (“10 cents on the dollar”).
4. Notable Companies/People
- Michael Saylor/MicroStrategy (MSTR): The originator of the corporate treasury playbook, whose continuous capital market activity (issuing debt to buy more BTC) is the benchmark for the trend.
- Artalog Holdings: Mentioned as a recent example of a large entity announcing a significant Bitcoin purchase ($1.5 billion).
- SBC (Ticker Mentioned): An example of extreme volatility where a stock surged dramatically after announcing a large Ethereum treasury purchase facilitated by Consensus, before collapsing, highlighting illiquidity risks.
- Cantor Fitzgerald & Strike (Jack Mallers): Cited as examples of mainstream institutions and crypto-native firms building out institutional crypto lending services.
5. Regulatory/Policy Discussion
- Political Engagement: The Bitcoin conference featured significant political figures (JD Vance, Eric Adams, Cynthia Lummis), suggesting increased political relevance. Vance’s framing of Bitcoin as a “hedge against bad policy making” was highlighted.
- Global Policy Moves: Mentions included Pakistan’s confusing signals regarding a potential Bitcoin reserve and IMF concerns, and Nigel Farage proposing a bill to lower crypto capital gains in the UK.
- Municipal Bitcoin Funds: Eric Adams’ proposal for New York City to explore municipal Bitcoin funds was noted.
6. Future Implications
The industry is maturing, evidenced by the institutional presence at the Bitcoin conference and the mainstream adoption by entities like PSG football club. However, the proliferation of corporate treasuries taking on leverage (lending against their BTC) introduces systemic fragility. The conversation suggests a future where many of these new treasury companies may fail or unwind their positions, creating opportunities for sophisticated distressed asset buyers.
7. Target Audience
Crypto and Traditional Finance Professionals, Hedge Fund Managers, and Corporate Strategists. The discussion requires an understanding of corporate finance structures (debt issuance, balance sheets), macroeconomics, and crypto market mechanics (lending, yield generation).
🏢 Companies Mentioned
💬 Key Insights
"money's pouring in, and it's not for the basis trade. So, this money's coming in likely more from the institutional side..."
"Caroline Crenshaw... basically said, 'How is it these crypto assets are supposedly not securities when it comes to registration requirements, but conveniently their securities when the registration season opportunities sell a new product?' And then she said, 'If you're confused, join the club,' which is pretty spicy..."
"What they did, they filed for that on Friday for Solana staking ETF and Ethereum staking ETF. And the way they say they qualify for Rule 6c11 under that 40 Act is basically saying we have a Cayman subsidiary in here that's holding the underlying assets that will be doing the staking, the hold staking tokens, as we were just talking about before, Joe."
"This is now kind of this interesting full-circle moment where you have a public company that has Solana on their balance sheet that then took it and staked it and created their own liquid staking token, and then took that LST and now put it onto a DeFi borrow-lend protocol that I don't think that's been done before."
"they announced even today that last week they announced that their Solana they have is staked, and they created their own liquid stake and token, liquid staking token. So, they have an LST now, and then that LST is now available in Camino Finance, Angel Investor, full disclosure, but Camino Finance is a kind of borrow-lend market with some other interesting DeFi primitives..."
"This is coinciding with the surge in crypto lending... many of these Bitcoin treasury companies using their Bitcoin as collateral for a loan to buy more Bitcoin and laying on the sink. And this is very ripe as what we saw in '21-'22, and it unwound pretty fast."