Bitcoin Treasury Companies: Perfect Arbitrage or Crypto Mirage?

In many ways, 2024 marked the year of institutional acceptance and adoption of cryptocurrencies by the world of traditional finance. The turning point came in January, when the SEC approved a wave of spot Bitcoin ETFs. Not long after, Blackrock listed its iShares Bitcoin Trust on the Nasdaq, which became the fastest ETF in history to reach $10bn in assets under management, achieving this milestone in just seven weeks.Bitcoin treasuries, which are corporate strategies involving the allocation of company funds into Bitcoin, simultaneously took off, offering an alternative route to investors via regular stock market exposure.MicroStrategy (MSTR) is to date, and by far, the most successful example of a corporate Bitcoin treasury, not just because it buys Bitcoin (it currently owns more than 530,000), but because it has mastered the financial and structural ecosystem that allows it to do so aggressively and effectively. Other firms are trying to follow suit, but unless they solve for the same financial constraints and regulatory hurdles, their efforts will likely remain marginal in comparison.In this note, we take a deep dive into the phenomenon, its promises but also the risks associated with it, and try to assess whether we have a one-off success story, or the beginning of a new, sustainable trend.