Bitcoin Treasury Strategy Faces Skepticism Over Long-Term Viability

James Check, the lead analyst at Glassnode, has expressed skepticism about the longevity of the Bitcoin treasury strategy. In a recent post on X, Check asserted that the strategy may have a much shorter lifespan than many expect, suggesting that the easy gains for new companies entering this space might already be behind them. Check's analysis indicates that the current market dynamics may not support the long-term viability of Bitcoin as a treasury asset for newer firms.

Check emphasized that the sustainability of a company’s product and strategy is crucial for long-term Bitcoin accumulation. He noted that investors are increasingly favoring early adopters, making it challenging for newer Bitcoin treasury firms to gain traction. "Nobody wants the 50th Treasury company," Check stated, highlighting the competitive nature of the market. He also warned that it is becoming increasingly difficult for new entrants to sustain a premium and gain a foothold without a serious niche.

Check's views are supported by the observation that, in the 30-day period leading up to his post, at least 21 entities added Bitcoin as a reserve asset. However, he cautioned that startup Bitcoin treasury firms, while attracting retail speculators, do not have infinite resources. Check admitted that it is hard to predict the exact timeline for the downturn of newer firms, as he remains bullish on Bitcoin's price, which was trading at approximately $107,990 at the time of his post.

Check also agreed with Udi Wizardheimer, co-founder of Taproot Wizards, who suggested that some companies are using the Bitcoin treasury strategy to make quick profits without fully understanding its long-term purpose. Wizardheimer noted that many of these companies are driven by the prospect of easy money and lack a deep understanding of the strategy. He predicted that the weaker firms might be acquired at a discount by stronger players, potentially extending the trend for a while longer.

Recent doubts have emerged over the sustainability of firms adopting a Bitcoin treasury strategy. Venture capital firm Breed argued in a report that only a few Bitcoin treasury companies will withstand the test of time and avoid the "death spiral" that could impact companies holding BTC close to net asset value. Additionally, concerns have been raised about "copycat" firms that lack proper safeguards or risk management, which could potentially harm Bitcoin's image if they fail.