Bitcoin treasuries may struggle to match Strategy, says Ammous

Saifedean Ammous, author of "The Bitcoin Standard," contends that Bitcoin treasury companies utilizing Bitcoin primarily for acquisitions may find it challenging to compete with Michael Saylor's Strategy. Ammous, speaking on Cointelegraph’s Proof of Thesis, posited that "I don’t see a compelling case for going to another Bitcoin treasury company other than Michael Saylor’s Strategy."

Strategy boasts the world's largest corporate Bitcoin treasury, consisting of 847,666 BTC, valued at $63.95 billion, as per its Monday 8-K filing. The company also holds a $5.02 billion USD reserve to cover preferred stock dividends and debt interest. Ammous suggested that Strategy's superior Bitcoin holdings enable it to secure loans at reduced interest rates, offering it an edge over smaller treasury companies. Previous drawdowns have not approached liquidation for the company, according to Ammous.

The company's financing model drew scrutiny during the summer as Bitcoin dropped below $60,000, and STRC preferred stock traded below its target price of $100. Strategy responded by raising the annual dividend rate to 12%, repurchasing shares, and increasing its cash reserve. It also sold some Bitcoin to fund dividends and STRC repurchases before resuming its Bitcoin accumulation. Despite this, Ammous maintained that Strategy could weather significant Bitcoin drawdowns due to its substantial cash reserves.

Ammous affirmed that even a substantial Bitcoin drawdown would leave Strategy in a strong position, citing its ample cash reserves. He advised that businesses with positive cash flow could allocate surplus funds into Bitcoin as a long-term reserve asset, advocating for more companies to adopt this strategy. However, he cautioned that investing in Strategy entails risks and suggested holding Bitcoin directly as a preferable alternative.

While Bitcoin may have already reached its bottom, Ammous warned that another crash could still push prices lower. He predicted that Bitcoin's next cycle could peak around 2029, with prices generally rising until then, possibly bottoming again or experiencing another crash. Ammous estimated Bitcoin's price in 2030 to be around $200,000, based on the Bitcoin power-law model.