Bitcoin Treasury Companies Spark 2024 ICO Fears Amid 500% Stock Surge

Bitcoin treasury companies have emerged as a new trend, drawing comparisons to the initial coin offering (ICO) boom of 2017-2018. While these companies are not identical to ICOs, critics and industry leaders have noted several similarities that raise concerns about a potential bubble. The rise of Bitcoin treasury companies began with MicroStrategy, which shifted its focus to issuing debt to buy Bitcoin in 2020. The company, later renamed Strategy, attracted significant attention and saw its stock value increase by 500% since early 2024. This trend accelerated after the 2024 election, with multi-million dollar purchases of Bitcoin by various companies decreasing price volatility and increasing demand.

Bitcoin treasury companies, such as ProCap BTC, Metaplanet, XXI Capital, and Nakamoto, have relied on crypto influencers to promote their stocks. These companies do not offer direct interaction with cryptocurrencies but outsource Bitcoin holdings to centralized exchanges like Coinbase. Critics argue that these companies are rooted in traditional finance and do not produce anything, relying solely on Bitcoin purchases using borrowed assets. This centralized approach raises concerns about sustainability and risk management, especially during bear markets.

The similarities between ICOs and Bitcoin treasury companies include the need for trust and the potential for insider trading, lack of transparency, and rug-pull schemes. Critics point out that both ICOs and treasury companies require investors to trust that the companies will not sell their Bitcoin holdings or dilute their assets. The lack of transparency in Bitcoin holdings further increases the role of trust for investors. Some critics compare Bitcoin treasury companies to SPACs, which are blank companies selling shares and promises.

Proponents of Bitcoin treasury companies argue that they are legitimate public and private companies that allow clients to benefit from Bitcoin price movements through shares. They also note that Bitcoin treasury companies are not selling vaporware, unlike ICOs. However, critics like Stack Hodler see these companies as "this cycle’s shitcoins," creating shares out of thin air to sell to people hoping to outperform Bitcoin. He suggests that businesses creating economic value via products and services and storing their profits in Bitcoin would bring lasting value to the Bitcoin network.

David Bailey, CEO of Nakamoto, compared his business to "the early day ICOs," highlighting the similarities in how these companies attract investors. While some critics see Strategy as an outstanding treasury that deserves trust, others dismiss all treasury companies altogether. The discussion continues, with Bitcoin maxis' voices on the rise. Scott Melker, host of the Wolf of All Streets podcast, suggested that many crypto treasury companies are scams and advised investors to buy Bitcoin directly, as it is still expected to reach $1 million even if the treasury narrative blows up.