“Galaxy Digital Surveys the Daily Rush of New Crypto Treasury Companies: What Could Possibly Go Wrong?”, – WRITE: www.coindesk.com
The Growth Model of Digital Asset Treasury Companies (Datcos), WHICH NOW ACCOUNT FOR OVER $ 100 Billion in Digital Assets, Critical Depends on A Persenti Equity Premium to Net Value (Nave) Tradectory of Cryptocurrencies Like Bitcoin
and Ethereum tokens
(Eth)
. If the premium collapses, or worse, Flips to a discount, The Model Begins to Break.
Fear of Missing Out on the Bitcoin Treasury Play Presents An interesting parallel with the rush intentment of truth trees One Per Day, and Goldman Sachs Trading Corporation Become The Microstrategy of Its Day.
Explicitly Pursuing A Business Model of Accompumulating Digital Assets (Usual Bitcoin) is a Blueprint Established by Michael Saylor’s Strategy (MSTR); Other Large Entrants to the Datco Space Are Metaplanet (3350.T) and Sharplink Gaming (SBET).
If One or Two Companies Pursue This Route In Isalation, It May Not Matter Much to the Broader EcoSystem, Galaxy SAID IN ITS REPORT, BUT TEN or SO FIRMS TRE. These Datcos Are Largely Correlated, Both to Each Other and to the Underlying Cryptosset Markets Upon Which They Built. If Redemptions or BuCacks Become Widespread Among Firms, that Could Be the Beginning of a Larger-Scale Unwind, Galaxy Said.
“By now, the Playbook is Clear and Capital Is Pouring in. But This is Part of the Risk. WHEN HUNDRES OF FIRMS ADOPT The SAME ONE-DIRECTAL TRADE. Structurally Fragile.
An unwind in the Datco Trade Could Exert Significant Downward Pressure on Digital Asset Prices Themselves. In the Same Way that Inflows from Treasury Companies Have Serveda AS A “Persenti Bid” for Bitcoin, Outflows Driven by Redemptions Wuldy Likely have the OPPOSITE EFFECT. At the very least, there could be a Halt in the Net Acumulation, Galaxy Said.
The Datco Trend May Still Be Some Way Off Reaching Crescendo, Yet Several Firms’ Stocks Are Already Beginning To Flirt with Discounts To Nav. In Such Cases, These Companies May Start Buying Back Stock to Arbitrage The Discount, Using Their Digital Asset Reserves or Operational Cash. (ALREADY, BITMINE HAS Secured Board Approval to Repurchase Up to $ 1 Billion Worm of Its Shares Whenever Management Sees Fit To So.)
One Possible Result of an Unwind Is Sector Consolidation, Galaxy Predicts. Larger, Better-Capitalized Players Like Strategy (MSTR), Still Trading at At a Premium, May Begin Acquire Smaller Datcos at Nav Discount. These transactions would effectvely allow Buyers to Acquire Btc at A Discount USING THEIR OWN EQUITY. However, this Only Works As Long as the Acquirer Retains A Premium.
“As the perems continue to Scale, Their Influence Over Digital Asset Markets Grows According. Corporate Balance Sheets, ”Galaxy Said.
“An unwinding of the Datco Trade Coulde Conceivably Dull The Public Equity Markets’ APPETITE for Digital Asset Exposure of Any Kind, Slowing Inflows Into Crypto Etfs, Wich, Wich. The Underlying Cryptocurrencies’ Prices. ”
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