The landscape of corporate treasuries in the cryptocurrency sector is experiencing significant shifts, according to David Bailey, CEO of Nakamoto, a company focused on Bitcoin treasuries. In a recent commentary on X, Bailey expressed concerns that the narrative surrounding treasury management within the blockchain space is becoming increasingly convoluted, particularly as companies begin adding underperforming altcoins to their balance sheets.
Bailey criticized the use of the term ‘treasury company,’ stating that it creates confusion amidst a backdrop of poorly managed assets and companies that lack clear vision. “Toxic financing, failed altcoins rebranded as digital asset treasuries (DATs), and numerous companies without a coherent strategy have muddled the narrative,” he remarked. He emphasized the importance of maintaining a core strategy focused on building and monetizing a company’s balance sheet. According to him, successful management could lead to asset growth, while poor stewardship would likely result in trading at a discount or being acquired by more adept firms.
He likened Bitcoin treasury companies to banks in the traditional fiat system, suggesting that the term ‘Bitcoin Banks’ might be better suited to describe the emerging financial institutions focused on cryptocurrency. Bailey noted that these entities are currently undergoing a test of their capabilities as they explore investments beyond Bitcoin (BTC) and take on additional risks associated with other cryptocurrencies.
Recent developments have illustrated this trend. For example, on August 2, Nasdaq-listed Mill City Ventures III was reported to be exploring a $500 million equity agreement to support its newly established Sui treasury strategy. Additionally, a report by Galaxy Digital indicated that narrative-driven theses are prompting firms to diversify their crypto holdings. This expanding interest includes cryptocurrencies like Ether (ETH), Solana (SOL), XRP (XRP), BNB (BNB), and HyperLiquid (HYPE), which are gaining traction alongside Bitcoin.
As it stands, publicly traded companies hold approximately $117.91 billion in Bitcoin, according to BitcoinTreasuries.NET. Ether is additionally becoming a popular choice for treasuries because of its staking capabilities, which allow it to function both as a store of value and a source of income. Approximately 3.14% of Ether’s total supply is currently held by publicly listed treasury companies, as reported by StrategicETHReserve.
This diversification into altcoins may have implications for Bitcoin’s market price, as noted by Galaxy Digital CEO Mike Novogratz. He stated that the current sideways movement in Bitcoin’s price could be influenced by treasury companies actively exploring other cryptocurrencies. “Bitcoin’s at a consolidation right now. Partly because you’re seeing a lot of these treasury companies in other coins take their shot,” Novogratz explained.
While investing in altcoins presents opportunities, it has also prompted scrutiny. Concerns have been raised about the sustainability of these alternative holdings, as highlighted by the venture capital firm Breed. They warned that only a limited number of Bitcoin treasury companies are likely to survive the challenging conditions, particularly those trading close to net asset value (NAV), which could lead to a perilous “death spiral” for some BTC-holding companies.
