Ark Invest Expert Takes Swipe At MSTR, MARA, Says ‘Bitcoin Treasury Companies Don’t Make Sense:’ ‘Funding Purchases With Debt…Seems Like A Recipe For Disaster’
Bitcoin (CRYPTO: BTC) treasury companies like Michael Saylor‘s Strategy Inc. (NASDAQ:MSTR) (formerly MicroStrategy) were in focus as Brett Winton, the chief futurist at ARK Investment Management LLC, highlighted that trouble could be brewing for such companies in the long run.
What Happened: As companies like MSTR have been issuing equity and debt to raise funds for Bitcoin purchases, Winton underscored that funding purchases with debt “seems like a recipe for disaster on the back end of this cycle.”
According to him, if the treasury companies keep doing so, “a higher debt mix” will “be the seed that grows to destroy the business-less business model.”
He explains this by highlighting the presence of an arbitrage opportunity till the time the stock prices for companies like MSTR are trading at a premium to the net asset value (NAV).
As of its May 12 SEC filing, MSTR held 568,840 Bitcoins at an aggregate purchase price of $39.41 billion, whereas its market capitalization stood at a staggering $108.55 billion.
Thus, Winton implied that BTC treasury companies could keep issuing equity until the arbitrage opportunity closes. “Competitors are now launching/raising will accelerate that process,” he said in …
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