Bitcoin Treasuries: Returns Losing Momentum

Adam Reeds, CEO and co-founder of Ledn, remains firm in his belief that Bitcoin is a solid reserve asset. However, he observes that recent market shifts signal a cooling interest in digital asset treasury (DAT) companies looking to accumulate BTC. Reeds stated, "Bitcoin treasury companies have been an incredible innovation for the space. What may be fading is the ability to get a 3x return." He highlighted that MicroStrategy achieved a staggering 24x return over five years compared to Bitcoin's 10x, but he doubts such immense returns are possible again. Signs of a slowdown in the crypto treasury boom, heavily inspired by Michael Saylor's MicroStrategy, have emerged over the past week. Some companies have started to offload parts of their treasury holdings or repurchase their stock. Recently, the total cryptocurrency market cap surged to nearly $4.3 trillion before dipping below the $4 trillion mark again. In tandem, DATs saw their market cap fall below $150 billion, with Bitcoin treasuries decreasing from $165 billion a month ago to $134 billion, even as Bitcoin's price remained relatively stable. Strategy’s stock dropped from a peak of about $455 in July to around $359 by Friday afternoon. Similarly, Metaplanet, a Bitcoin treasury listed in Tokyo, has seen a decline of over 30% in the past month. Reeds noted, "What’s fading is the ability to create unique propositions." Many digital asset CEOs claim their aim is to generate more Bitcoin per share but questions arise about their unique management capabilities and capital connections to achieve this. On Friday, the total cryptocurrency market cap rebounded to exceed $4.1 billion, with Ethereum, Solana, and Dogecoin all experiencing significant gains after Fed Chairman Jerome Powell hinted at a potential interest rate cut next month. Ledn, focusing on Bitcoin lending, reports having processed over $10 billion in loans. Disclaimer: The Block is an independent media outlet providing news and data. As of November 2023, Foresight Ventures is a major investor of The Block. The Block operates independently to provide objective information about the crypto industry. This article is for informational purposes only and does not constitute legal or investment advice.