The next bubble to pop - btc treasury companies.
Looking for smarter brains than me to weigh in. I heard there are over 100 publicly traded companies that are or will convert into basically bitcoin treasury companies, and the basic model is borrow to buy btc, the. Borrow more and buy more. That is just in USA with dozens more internationally. Seems a bit of a fad/meme with more announcements every week. Isn't this just a giant short target? They will all have a liquidation point (where the value of the btc is lower than the value of the debt) so won't it be quite easy for a large player to max sell btc causing some to go bust (which then of course causes those companies to sell which causes more companies to hit bankruptcy). The stock is particularly interesting for a hedge fund to short because it's publically traded, you can see at which point the equity goes to zero. Btc could get halved but the equity is 100pct return. If the btc doubles I'd assume these companies are just going to issue more debt and buy more btc so their average entry price is always rising and their leverage dosent go down vs assets as they will keep piling on debt. Only takes one badly run balance sheet to cause a pop then 99 more companies in the cross hairs. High entry price and high leverage = short target. Can someone tell me if this is over simplistic? submitted by /u/mrnumber1 [link] [comments]
Looking for smarter brains than me to weigh in. I heard there are over 100 publicly traded companies that are or will convert into basically bitcoin treasury companies, and the basic model is borrow to buy btc, the. Borrow more and buy more. That is just in USA with dozens more internationally.
Seems a bit of a fad/meme with more announcements every week.
Isn't this just a giant short target? They will all have a liquidation point (where the value of the btc is lower than the value of the debt) so won't it be quite easy for a large player to max sell btc causing some to go bust (which then of course causes those companies to sell which causes more companies to hit bankruptcy).
The stock is particularly interesting for a hedge fund to short because it's publically traded, you can see at which point the equity goes to zero. Btc could get halved but the equity is 100pct return. If the btc doubles I'd assume these companies are just going to issue more debt and buy more btc so their average entry price is always rising and their leverage dosent go down vs assets as they will keep piling on debt. Only takes one badly run balance sheet to cause a pop then 99 more companies in the cross hairs.
High entry price and high leverage = short target.
Can someone tell me if this is over simplistic?
[link] [comments]
