A prominent voice in the cryptocurrency sector, David Bailey, CEO of the Bitcoin treasury company Nakamoto, has voiced concerns regarding the confusing landscape created by companies adding underperforming altcoins to their balance sheets. In a recent post on social media platform X, Bailey referred to the term “treasury company” as misleading, critiquing the emergence of what he called “toxic financing” and the rebranding of failed altcoins as Digital Asset Treasuries (DATs). His comments reflect a growing dissatisfaction with the direction of certain companies in the cryptocurrency space, which he claims lack a clear plan or vision.
Highlighting the challenges faced by the sector, Bailey stated that the core strategy for successful prudence lies in building and monetizing one’s balance sheet. “If you can do it well, you will grow your assets over time; if you do it poorly, you will trade at a discount and be consumed by someone who can do it better,” he articulated. Invoking the analogy of traditional banking, Bailey suggested that “the bitcoin treasury company of the fiat system is a bank,” further proposing that these entities could be more accurately termed Bitcoin financial institutions if the term “bank” is deemed off-putting.
Bailey signaled that the entire treasury sector is currently “being tested,” a point underscored by the trend of publicly listed companies beginning to diversify their cryptocurrency holdings beyond Bitcoin. In early August, reports emerged indicating that Nasdaq-listed Mill City Ventures III is contemplating raising an additional $500 million through an equity agreement to support its newly announced Sui treasury strategy. According to a report from Galaxy Digital, firms are increasingly driven by narrative-focused hypotheses to expand their treasuries, considering various cryptocurrencies like Ether (ETH), Solana (SOL), XRP, BNB, and HyperLiquid (HYPE) alongside Bitcoin.
As of now, Bitcoin constitutes approximately $117.91 billion within publicly traded companies, as reported by BitcoinTreasuries.NET. Ether, on the other hand, is gaining momentum as an attractive alternative asset, primarily because it can be staked for annual returns, complicating its use as both a store of value and a source of income. Notably, around 3.14% of Ether’s total supply is held in publicly listed treasury companies, according to StrategicETHReserve.
This trend of diversifying treasuries might also shed light on Bitcoin’s recent price stagnation. Galaxy Digital’s CEO, Mike Novogratz, suggested that the consolidation period for Bitcoin is partly influenced by treasury companies branching out to explore other cryptocurrencies. Consequently, he remarked, “Bitcoin’s at a consolidation right now” due to treasuries venturing into additional assets.
Despite the evolving narrative surrounding cryptocurrencies in treasury positions, some skepticism remains, particularly regarding the sustainability of altcoins in these portfolios. Venture capital firm Breed has forecast that only a select few Bitcoin treasury companies will withstand the pressures of the market, cautioning against a potential “death spiral” affecting those trading close to their net asset value.
As the sector evolves, the scrutiny faced by both altcoins and Bitcoin treasuries continues to underscore the complexities of navigating the cryptocurrency landscape.
