SECTOR ETFIBITFBTCCore thesis · 5/5Save idea

No single ticker was named. Bitcoin ETFs are one way for retail investors to get exposure. Not a recommendation.

Bitcoin treasury stocks underperform direct ownership

The bear case argued is that corporate Bitcoin treasury companies will materially underperform direct Bitcoin ownership due to misaligned incentives, corporate tax liabilities, and irrational valuation premiums.

The argument

The guest argued that retail investors are buying these equities at a premium to net asset value (NAV), which is a backward pricing of risk given the added counterparty, execution, and censorship risks of a corporate wrapper. Furthermore, the guest pointed out that valuation models for these stocks fail to discount for future corporate tax liabilities and high corporate expense ratios, which will ultimately drag on returns compared to holding the underlying asset directly.

The thesis, stress-tested

✓ What validates it

✓Bitcoin treasury stocks trading down to or below 1x Net Asset Value (NAV)
✓High-profile treasury companies underperforming the spot price of Bitcoin over a multi-year horizon

▸ Risks discussed

▸Persistent market irrationality keeping premiums high
▸Successful execution of complex financial engineering that temporarily boosts Bitcoin per share

Hear it yourself

"I think that's, I mean, just from my own vantage point of being at meetups, being at conferences, of course, people are trickling in here and there in terms of new people, but there was not a decided wave like there was in 2017 or 2020, 2021. And why that is, I don't know if it was just that the price increase was a function of the ETF and a lot of low conviction, small, you know, institutional flows rather than an unlock of a wave of new people actually figuring out that there was signal on Bitcoin. And then with"

02:15 · Verify in source ↗

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