The companies focused on the accumulation of Bitcoin (BTC) are starring a cycle that, although promising for some investors, could end with several of them returning to the category of “zombies”.
But what are zombies companies? To clarify, it is a metaphor that refers to companies in decay, which, although they continue operational and quote in the stock market, are dying, with important failures in their main businesses, low market capitalizations and a difficult future landscape.
Several of these companies ceased to be zombies by adopting Bitcoin as a reserve asset and including it in their treasury, because with the boom of the asset in the last year, they took benefit from their investment. There are currently more than 170 stock exchange companies that adopted BTCbeing a trend that extended as gunpowder in several countries of the world. Among those entities such as Strategy and Japanese Metaplenet, who saw their actions to reach record prices after joining the movement.
Exchange Bitmex analysts Come That the model of these Bitcoin and cryptoactive treasury companies, in which it is invested in BTC and cryptocurrencies to take advantage of market volatility, has been attractive to investors, especially those who seek to obtain great benefits in a short term. However, the lack of a solid structure and the inherent volatility of these assets, suggest that not all of these companies will survive in the long term.
Bitcoin and cryptocurrency treasury companies usually follow a model of reverse acquisition operations (reverse Takeover) or acquisition company agreements with special purpose (SPAC). In simple terms, a failed company that lies in the stock market is acquired by a new management, which places its focus on the purchase of BTC with funds captured from investors interested in participating in the growing digital asset industry. Through this structure, Companies can increase the value of their shares based on the acquired currency, creating a purchase cycle that feeds their growth.
This is a model similar to that led to Michael Saylor in Strategy, which is currently the stock market contribution company with the largest Bitcoin reserves, exceeding 628,000 BTC, valued at almost USD 80,000 million, according to the current market price. Cryptonotics has reported that the actions of this company have played historical maximums, driven by direct investment in BTC, registering increases of 209% in one year.
That American company has borrowed with billions of dollars to continue buying Bitcoin, a strategy that has been replicated by other companies belonging to different items and regions of the world, unleashing a real institutional fever for the largest digital asset in the market.
Associated risks
However, the dynamic is complex. Bitmex recalls that while some investors seek to take advantage of the possibility that the action cotice to a high multiple of its value, there are associated risks. The trust placed in the managers is crucial to maintain the profit cycle, but if the strategy does not meet expectations, companies could be seen in difficulties, for example, that they are worth less than the amount of cryptocurrencies they have In Treasury.
One of the attractions of this model is the participation of investors in Pipe (Private Investment in Public Equity). These investors buy shares in financing rounds prior to stock exchange, hoping that cryptocurrency market valorization allows a rapid benefit. In the best case, companies significantly increase the value of their assets, and Pipe investors manage to obtain benefits by selling their actions at higher prices.
However, investments in Bitcoin and cryptocurrency treasury companies are based on speculation, which generates a high risk sensation. When these companies quote at a price much higher than the value of the assets they possess, there may be a “bubble” that, once it exploded, leads to the value of your actions falling to discount levels, below your Mnavas suggested by the analytical company.
The perspective of companies with Bitcoin treasures and other cryptocurrencies such as a financial bubble has already been expressed before. For example, analyst Manuel Territors Godoy, said last week that this strategy of accumulation of digital assets is not exempt from risks, since there is the possibility that the action does not rise, which would prevent maintaining cryptocurrencies, as well as paying corporate debts.
To all this is added the “systemic threat” that this is for the Bitcoin market, since if the currency in treasury falls in price, companies could start selling their holdings to face the situation, creating a dominated effect among other companies with treasureries of digital assets, which would impact directly on the BTC contribution.
In this context, some of these companies could face a gloomy future, going from being prominent actors in the market to become financial “zombies” again, says Bitmex.
That is where the largest companies could highlight, since if difficult times arrive and there is a contagion of massive liquidations of small businesses with BTC treasures and cryptocurrencies, it is very possible that Strategy and other large -scale players intervene with financial assistance to stop the domino effect, as the BREED analysis firm sees it.
In that order of ideas, from Bitmex they emphasize that Bitcoin’s treasury companies have an uncertain future. Although the model can offer significant short -term yields, Companies that fail to stay in the path of profitability can become financial zombies againlosing attractiveness for investors. It is clear to them that the sector will be marked by consolidation, and the companies that survive can take advantage of the growing demand for BTC and cryptocurrencies by institutional investors.
