Bitcoin Treasury Companies
Speculative Attack! Part I
A…parallel with 1929 is the present commitment to seemingly imaginative, currently lucrative, and eventually disastrous innovation in financial structures…In the months and years prior to the 1929 crash there was a wondrous proliferation of holding companies and investment trusts. The common feature of both…was that they conducted no practical operations; they existed to hold stock in other companies.
—JK Galbraith, The 1929 Parallel, The Atlantic, January 1987 prior to the 1987 Crash
Bitcoin has officially gone corporate. More than 200 entities now collectively hold over $350 billion worth of Bitcoin, and the stampede is rapidly accelerating as new "Bitcoin treasury" companies emerge almost daily to cash in on the trend. As a result, the true nature of this phenomenon remains hotly contested: classic leveraged pyramid scheme or the latest front in the most consequential monetary battle of our lifetime?
The truth may lie somewhere between these extremes, but either interpretation points to the same underlying reality: Multiflation is intensifying and the dynamics we explored in The Flight Into Fake Values—originally identified during the 2017 crypto bubble—are again playing out on an even broader scale. We recommend reading our earlier analysis first, as it provides essential context for understanding what the Bitcoin Treasury craze potentially signifies. Building on that foundation, we'll offer novel insights for both bulls and bears by placing this phenomenon within the broader sweep of financial history—including the Weimar’s “inflation profiteers” and the 1920’s “investment trust” bubble.
Receive our latest insights on X/Twitter @bewaterltd and visit our website bewaterltd.com
Not investment advice. For educational/informational purposes only. See Disclaimer.
Speculative Attack
Nearly eleven years ago to the day, on July 4th, 2014 Pierre Rochard penned “Speculative Attack”, making the case for what even Bitcoin skeptics should now recognize as one of the most spectacular trades in financial history: the strategy of taking on debt to buy bitcoin, effectively shorting fiat currencies and the entire financial system. While his entire article merits reading, Rochard’s conclusion centered on Hyperbitcoinization:
Bitcoin will become mainstream. The Bitcoin skeptics misunderstand how strong currencies like bitcoin overtake weak currencies like the dollar: it is through speculative attacks and currency crises caused by investors.
In a follow-up article published last year on July 4th, Pierre and
wrote Speculative Attack, Season 2: The Case for the Greatest Pair Trade in History:The more mainstream Bitcoin becomes, the more compelling the speculative attack will be. Eventually it will become necessary, and not long after that it will simply cease to be possible, as nobody will trade Bitcoin for any amount of fiat, or even risk its loss in financial calculation. While we are clearly incredibly far along from 2014, we are nowhere near this final state. The slow-motion collapse of fiat continues, and the avenues for directing fiat shorts to Bitcoin longs widen. The speculative attack lives on. Season Two begins.
This dynamic of borrowing depreciating currency to acquire appreciating assets is not without historical precedent. The Weimar hyperinflation created what Mises described as “inflation profiteers”:
One of the reasons why public opinion [at the time] misconstrued the economic consequences of the German inflation was the emergence of a class of inflation profiteers. The profiteers were those speculators who were quicker to realize the true meaning of the inflationary boom than were the managers of the banks… No matter what stock he bought, the speculator netted a gross profit which exceeded by far the interest he had to pay to the lending bank. As long as the inflation went on there was no risk for him in embarking upon bull transactions with borrowed money… The inflation favored the debtors at the expense of the creditors. It made a very small group of smart speculators rich. It impoverished the immense majority of the nation.
The parallel is striking: in both cases, those who recognized the monetary dynamic early could execute an “inflation carry trade”: borrow the depreciating currency at artificially low real rates and convert it into assets that would appreciate faster than their debt service costs.
Saylor’s Counterspell: Inverting The Alchemy Of Risk
What distinguishes this speculative attack from its Weimar predecessor is that now—thanks to Bitcoin, Bitcoin Treasuries, Money Printer Go Brrr memes, and social media—it is nearly impossible for public opinion to misconstrue the economic consequences of the inflation. The speculative attack has evolved from a relatively obscure trading strategy during the Weimar Republic into a coordinated, full-fledged social media-mediated and Wall Street-assisted assault on the monopoly of state-issued money itself.
Today’s “inflation profiteers”, led by Michael Saylor, are openly calling their strategy an attack on fiat currency—conceptually similar to a bank run. This potentially represents an incipient digital-age version of die Flucht in die Sachwerte—the flight into real values that once drove Germans to dump rapidly depreciating Deutschemarks for any tangible asset.
Unlike the Weimar speculators and consumers, today's bitcoin maximalists broadcast their strategy across social media platforms, podcasts, and financial forums globally, creating a self-reinforcing hyperstitious feedback loop that accelerates Bitcoin adoption—the more Number Go Up, the faster the memetic virus spreads. Each successful conversion from fiat to Bitcoin validates the thesis and attracts new participants to the cause, while simultaneously weakening confidence in the very currencies being abandoned—a dynamic we explored further in our piece on Memetic Monetary Theory. This transforms what would ordinarily be merely an “inflation carry trade” available only to sophisticated insiders into a mass memetic movement that threatens the fundamental assumptions underlying the modern financial system.
Moreover, Saylor is demonstrating black belt-level mastery of financial jiu jitsu, employing Wall Street's own "TradFi" financial engineering against the TradFi system itself. In effect, he is single-handedly attempting to reverse the Symbolic Alchemy Of Risk spell that the fiat system has cast over the past four decades.
Saylor has already begun to weaponize the system’s own Ouroboric nature against itself, but two notable events would accelerate this process exponentially. S&P 500 inclusion would force passive index funds (and likely momentum-driven algorithms) to buy MicroStrategy stock regardless of its valuation or mNAV, while AAA bond ratings from the rating agencies would unlock massive institutional funding for MicroStrategy and Bitcoin; either scenario could send “hyperbitcoinization” into overdrive.
Bitcoin bulls are already salivating, viewing MicroStrategy's various preferred shares as the foundation for how investments will be priced under a “Bitcoin Standard” if Bitcoin replaces the dollar’s reserve currency status—effectively taking the place of the US Treasury “risk free rate” in the Alchemy Of Risk that currently sets baseline rates for all investments globally today.
Bitcoin Treasury Companies
Bitcoin Treasury Companies like Microstrategy are therefore the institutional embodiment of Rochard’s Speculative Attack, and currently serve as the primary vector for Bitcoin’s memetic monetary spread. As Saylor recently acknowledged: "If we think about the spread of Bitcoin as a Monetary virus [meme] and as an idea, the super spreaders—the amplifiers of the virus are corporations."
A bitcoin treasury company is a business built on a straightforward premise: accumulate as much Bitcoin as possible within a corporate shell. The bull case for such a company—as opposed to simply self-custodying Bitcoin oneself—rests on leveraged exposure: if you believe in Bitcoin's long-term potential, these firms offer amplified upside by locking in long-term debt at low interest rates to buy more Bitcoin, creating "safe" leverage that amplifies gains while minimizing margin call risk. As Bitcoin eats the world, companies holding the largest reserves will capture most of the value in the financial system, and then have multiple monetization options available to them in the future—such as acquiring profitable businesses with their Bitcoin holdings or leveraging their treasury position for other strategic advantages.
mNAV: The Master Key
These treasury companies currently trade at a premium to their Bitcoin holdings, measured by what's called mNAV (multiple-to-net asset value). Essentially, investors are willing to pay more for shares in the company than the underlying Bitcoin is worth. When a company trades at a 2x mNAV premium, investors are paying $2 worth of stock value for every $1 of underlying Bitcoin the company owns.
This creates a powerful arbitrage opportunity. The company can issue new shares at the premium market price and use those proceeds to buy Bitcoin at regular market price. Since the company is trading expensive stock for cheaper Bitcoin, each share issuance is accretive—it increases the value for existing shareholders despite diluting the share count. Each dollar of new equity raised purchases more than a dollar of underlying Bitcoin value, making existing shareholders better off even as total shares outstanding increase—assuming Bitcoin prices and the market premium remain constant following the offering.
This dynamic explains the recent surge of new Bitcoin treasury companies racing to capitalize on mNAV premiums while market conditions remain favorable. As long as the market maintains its premium valuation of these Bitcoin-holding vehicles, companies can “print money” by continuously issuing shares to buy more Bitcoin.
The Skeptics
The strategy has attracted notable skeptics. Veteran short sellers like Jim Chanos are shorting MicroStrategy while buying Bitcoin directly, betting that the mNAV premium will disappear.
Chanos contends that he is executing the same underlying trade as Michael Saylor—he, too is sellling MicoStrategy stock to buy Bitcoin.
As with all arbitrage opportunities, Chanos expects that this pricing discrepency will eventually resolve itself, returning to a state where one Bitcoin will equal (at most) one Bitcoin in market value. Saylor—with help from the Wall Street machine—will inevitably drive this convergence by continuing to issue Bitcoin-backed paper in unlimited quantities until the premium evaporates and the arbitrage opportunity disappears.
The Debate
If you're bearish on Bitcoin itself, then naturally you'll be skeptical of companies loading up their balance sheets with debt to buy Bitcoin, and there is not much point in discussing the matter further. Even if you don’t believe in Bitcoin, however, let's posit several key assumptions for the sake of argument and see where they lead us.
Bitcoin represents one of the most significant technological breakthroughs in human history.
Every corporation and individual should incorporate some Bitcoin into their own treasury strategy as part of the Multiflation Method’s Monetary Evolution Archetype.
Bitcoin is the “apex asset” that will take an enormous share of assets from fiat and TradFi and therefore Bitcoin's long-term trajectory points decisively upward.
Michael Saylor stands as a visionary genius for weaponizing financial engineering jiu jitsu against the existing TradFi system.
Microstrategy has intelligently gone about extending the duration of its debt to avoid forced liquidation during the next, inevitable Bitcoin correction.
None of the BTC treasury companies are fraudulent and none get hacked.
Up Next: Part II
Even accepting these optimistic premises at face value, the current frenzy surrounding copycat Bitcoin Treasury Companies—or worse yet, non-Bitcoin “crypto treasuries”—bears striking parallels to the investment trust euphoria of the 1920s that contributed to and preceded the Crash of 1929, discussed in greater detail in Part II.
A troubling question emerges: why should investors pay premium prices for corporate wrappers around Bitcoin when they could simply buy Bitcoin directly through an ETF or self-custody arrangement? The mNAV premium that makes the entire business model work depends on the immutable human behavioral tendencies that drove investors in 1928 to pay $200 for shares in levered investment trusts holding $100 worth of underlying stocks.
The investment trusts of the 1920s promised the same accretive, leveraged magic that Bitcoin treasury companies offer today: professional management and amplified exposure to assets perceived as scarce. Like today's Bitcoin treasuries, they traded at substantial premiums to their underlying holdings. New trusts launched almost daily to meet insatiable investor demand.
This should give us pause and prompt serious reflection about what these developments might signal—not just about Bitcoin, but about the broader Multiflation monetary and market environment we're operating within. Today’s market environment mirrors an unholy amalgamation of prior investment episodes—the 2017 crypto mania, the Roaring Twenties boom preceding the Great Depression, the Weimar “inflation profiteers”, and the Mississippi/South Sea Bubbles we recently examined in the Symbolic Alchemy Of Risk.