Corporate Bitcoin treasury firms whose primary focus is purchasing the digital asset might find it difficult to rival Michael Saylor’s Strategy, noted economist and author of “The Bitcoin Standard” Saifedean Ammous remarked.
“I don’t see a compelling case for going to another Bitcoin treasury company other than Michael Saylor’s Strategy,” Ammous said during a recent appearance on the Cointelegraph show Proof of Thesis.
Based on its Monday 8-K filing, Strategy maintains the globe’s largest corporate Bitcoin reserve, holding 847,666 BTC purchased for a total of $63.95 billion. Furthermore, the company disclosed a $5.02 billion fiat reserve designated for servicing debt interest and preferred stock dividends.
Related: ‘Bitcoin Standard’ author explores reality where decentralized gold stopped WWI
Strategy’s size and cash reserves
Ammous explained that Strategy’s massive Bitcoin stockpile enables it to secure loans at reduced interest rates, offering a distinct edge over lesser treasury operations. He noted that past market corrections never pushed the firm close to insolvency.
The financing strategy of Strategy drew intense scrutiny over the summer months as the price of Bitcoin dipped under $60,000 and the firm’s STRC preferred stock traded substantially below its $100 baseline target.
In response, Strategy elevated the annual dividend yield on STRC to 12%, bought back shares, and expanded its liquid cash buffer. The enterprise also liquidated a portion of its Bitcoin holdings to support STRC buybacks and dividend payments prior to continuing its Bitcoin accumulation program.
“Even a much bigger Bitcoin drawdown is going to leave them in a decent situation because they have enough cash on hand to make their payments,” Ammous stated.
Related: Saylor outlines ‘bill of digital rights’ to help build prosperity in future economy
According to Ammous, commercial entities operating with positive free cash flow are well-positioned to channel excess funds into Bitcoin as a long-term treasury vehicle, and he anticipates broader industry adoption of this practice.
“I think pretty much every business should be doing this.”
He drew a clear line between those reserve holdings and the liquid capital required for day-to-day, weekly, and monthly business operations.
Nevertheless, Ammous issued a warning that purchasing shares of Strategy involves distinct risks, adding that he personally prefers direct ownership of Bitcoin.
Bitcoin’s next peak could come in 2029
Ammous suggested that Bitcoin has likely found its market floor, though another sudden drop could still drive valuations downward. He predicted that the upcoming market cycle might reach its zenith in 2029, with valuations generally trending upward until that milestone.
We may bottom again, we may witness another crash that takes us down.
As the psychological scars of past bear markets fade, milder corrections could make Bitcoin an increasingly appealing asset class for institutional fund managers, Ammous observed.
When prompted for a price prediction for Bitcoin by 2030, Ammous offered a conservative estimate of roughly $200,000. This projection was derived from the Bitcoin power-law model, leaning toward the conservative side of the spectrum he discussed.
“I wouldn’t bet on it,” he concluded.
Magazine: Stablecoins can drain from banks and nations at lightning speed
Cointelegraph is dedicated to unbiased, transparent reporting. This journalistic piece follows the guidelines outlined in Cointelegraph’s Editorial Policy to deliver precise and up-to-date news. Readers are advised to conduct independent verification of all reported details.
Originally published at https://cointelegraph.com/news/bitcoin-treasuries-struggle-strategy-says-ammous?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound.
