The harvest of public companies that use their actions that use their actions to accumulate the treasure bonds of digital assets should cause lessons in history about the way in which composite risks can spread through the financial system and then unramatically unravel, warns a report on the digital galaxy trend.
The growth model of digital assets treasury companies (Datcos)that now represent more than $ 100 billion in digital assets, it depends critically on a capital cousin to the value of net assets (NAV)driven by the path of cryptocurrencies as bitcoin
and tokens ethereum (Eth). If the premium collapses, or worse, turn a discount, the model begins to break.
The fear of missing the Bitcoin Treasury game presents an interesting parallel with the trouble in the investment trusts of the 1920s, a reflexive loop and a mass speculative pathology, which saw new trusts launched at a rate of one per day, and Goldman Sachs Trading Corporation became the microstratege of his day.
Explicitly pursue a business asset accumulation business model (Generally Bitcoin) It is a plan established by Michael Saylor’s strategy (Mstr)which began the accumulation of BTC in 2020; Other great participants in Datco’s space are Metaplenet (3350.T) AND SHARPLINK GAMES (Sbet).
If one or two companies pursue this route in isolation, it may not matter much for the broader ecosystem, Galaxy said in his report, but ten or less companies a week now crowded in this trade. These data are largely correlated, both for others and for the underlying cryptoSet markets in which they are built. If the repurchases or repurchases are generalized among companies, that could be the beginning of a relaxed on a larger scale, Galaxy said.
“For now, the Play Book is clear and capital is coming. But this is part of the risk. When hundreds of companies adopt the same Single Management Commerce (Raise equity, buy crypto, repeat)It can become structurally fragile. A recession in any of these three variables (Feeling of investors, crypto prices and liquidity of capital markets) You can begin to unravel the rest, ”said the report.
A relaxed in Datco’s trade could exert significant downward pressure on digital assets prices. In the same way that the tickets of the Treasury companies have served as a “persistent offer” for Bitcoin, the exits promoted by the channels would probably have the opposite effect. At least, it could have stopped in net accumulation, Galaxy said.
Datco’s trend can still be somehow reaching Crescendo, however, the shares of several companies are already beginning to flirt with discounts for NAV. In such cases, these companies can start buying shares to arbitrate the discount, using their digital asset reservations or operational effective. (Already, Bitmine has assured the approval of the Board to repurchase up to $ 1 billion in its shares every time management considers appropriate to do so).
A possible result of a relaxed is the consolidation of the sector, predicts the galaxy. Bigger and better capitalized players such as strategy (Mstr)Still negotiating with a premium, you can start acquiring smaller datcos with NAV discounts. These transactions would effectively allow buyers to acquire BTC with a discount using their own equity. However, this only works whenever the acquirer retains a premium.
“As these companies continue to climb, their influence on digital asset markets grows accordingly. A relaxed would weaken the strongest tail crypto that has had this cycle: the normalization of digital assets in corporate balances,” Galaxy said.
“An unwilling of Datco’s trade could oakably the appetite of public capital markets due to the exposure of digital assets of any kind, reducing tickets to cryptographic ETF, which, on equal terms, would weigh the prices of underlying cryptocurrencies.”
