Competing Bitcoin Treasury Firms Face Uphill Battle Against Strategy, Ammous Claims
Saifedean Ammous, who authored "The Bitcoin Standard," believes Strategy's substantial size and available cash position it ahead of competing treasury companies.
Companies that function as Bitcoin treasuries with their primary focus on accumulating the digital currency may find it difficult to rival Michael Saylor's Strategy, says Saifedean Ammous, economist and author of "The Bitcoin Standard."
"I don't see a compelling case for going to another Bitcoin treasury company other than Michael Saylor's Strategy," Ammous said on the latest episode of Cointelegraph's Proof of Thesis.
The world's most extensive corporate Bitcoin treasury belongs to Strategy, which has accumulated 847,666 BTC purchased for $63.95 billion, based on the company's Monday 8-K filing. Additionally, the firm disclosed a US dollar reserve totaling $5.02 billion designated for covering preferred stock dividends and interest on debt.
Strategy's size and cash reserves
According to Ammous, Strategy's more substantial Bitcoin portfolio enables the company to secure financing at more favorable rates, providing it with a competitive edge over smaller treasury operations. He noted that prior market declines had failed to push the firm anywhere near liquidation territory.
The financing approach employed by Strategy faced increased scrutiny during the summer months when Bitcoin dropped beneath the $60,000 threshold and the company's STRC preferred stock saw its value decline significantly below the $100 target price.
To address the situation, Strategy increased STRC's annual dividend rate to 12%, bought back shares and strengthened its cash reserve. The company also liquidated a portion of its Bitcoin holdings to help finance dividends and STRC share repurchases before returning to its Bitcoin acquisition strategy.
"Even a much bigger Bitcoin drawdown is going to leave them in a decent situation because they have enough cash on hand to make their payments," Ammous said.
According to Ammous, businesses generating positive cash flow have the opportunity to allocate their excess cash into Bitcoin as a reserve asset for the long term, and he anticipates more companies will embrace this approach.
"I think pretty much every business should be doing this."
He made a clear distinction between those reserves and the cash required for daily, weekly and monthly operational expenses.
Despite this, Ammous issued a warning that investing in Strategy comes with risks and stated his preference for direct Bitcoin ownership.
Bitcoin's next peak could come in 2029
According to Ammous, Bitcoin has likely already reached its bottom, though he acknowledged that another crash remains possible and could push prices even lower. He projected that Bitcoin's upcoming cycle might reach its peak in 2029, with prices mainly trending upward between now and then.
We may bottom again, we may witness another crash that takes us down.
According to Ammous, less severe drawdowns might enhance Bitcoin's appeal to major asset managers as recollections of earlier bear markets become more distant.
When questioned about a Bitcoin price projection for 2030, Ammous offered his most informed estimate at approximately $200,000. This forecast was derived from the Bitcoin power-law model, with Ammous selecting a value toward the conservative end of the range he referenced.
"I wouldn't bet on it," he added.