Cryptocurrency treasury firms focused mainly on acquiring the digital asset might find it difficult to rival Michael Saylor’s Strategy, in the view of economist and author of “The Bitcoin Standard” Saifedean Ammous.
“I do not see a strong rationale for choosing any alternative Bitcoin treasury enterprise outside of Michael Saylor’s Strategy,” Ammous stated during a recent installment of Cointelegraph’s Proof of Thesis.
Strategy maintains the planet’s biggest corporate Bitcoin portfolio, holding 847,666 BTC purchased for $63.95 billion, according to its Monday 8-K regulatory document. The organization also disclosed a $5.02 billion United States dollar buffer designated for preferred equity dividends and debt servicing costs.
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Strategy’s size and cash reserves
The sheer scale of Strategy’s Bitcoin assets enables it to secure loans at more favorable rates, conferring a competitive edge over modest treasury counterparts, according to Ammous. He noted that prior market corrections had not pushed the firm close to insolvency.
Strategy’s funding structure drew intense scrutiny over the summer months as Bitcoin dropped beneath $60,000 and the firm’s STRC preferred shares traded significantly under their $100 goal value.
Strategy bumped the annual dividend yield of STRC to 12%, bought back shares, and expanded its cash cushion. It additionally liquidated a portion of its Bitcoin to support dividend payments and STRC share buybacks ahead of restarting its Bitcoin accumulation.
“Even a much deeper Bitcoin correction will leave them in a solid position because they retain ample liquid cash to fulfill their obligations,” Ammous mentioned.
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Enterprises generating positive cash flows can allocate excess funds into Bitcoin as a long-term treasury asset, Ammous suggested, noting his expectation that additional corporations will embrace this strategy.
“I believe essentially every business ought to pursue this.”
He differentiated those reserves from working capital required for daily, weekly, and monthly business operations.
Nonetheless, Ammous warned that putting money into Strategy involves distinct exposures and expressed his preference for maintaining direct custody of Bitcoin.
Bitcoin’s next peak could come in 2029
Bitcoin has likely established its market bottom, although a secondary downturn could still push valuations lower, Ammous remarked. He mentioned that Bitcoin’s upcoming market cycle might reach its peak in 2029, with valuations generally climbing upward until that point.
We could bottom once more, we might experience another sell-off that brings us downward.
Milder pullbacks could render Bitcoin increasingly appealing to massive institutional fund managers as the memory of past bear markets fades, Ammous explained.
When prompted for a Bitcoin valuation forecast for 2030, Ammous offered an educated guess of roughly $200,000. He formulated this prediction using the Bitcoin power-law framework, opting for a figure near the conservative end of the spectrum he referenced.
“I would not gamble on it,” he added.
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Originally published at https://cointelegraph.com/interview/bitcoin-treasuries-struggle-strategy-says-ammous?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound.
