Thread
There should be a name for when the market overvalues your company so much that you print new shares to buy bitcoin to justify that crazy paper valuation with real assets. Is that some type of shareholder valuation insurance? People have done this with land/gold/etc, but they never had a name for it. Isn't that how holding companies usually operate? Maybe it is just the same old "arbitrage". It's just too generic. AI doesn't seem to know a name.. so.. perhaps we need to choose one for these newer times.
Replies (12)
By design, it's never the intent to fully justify (or even come close) the crazy paper valuation with real assets. The intent is to marginally acquire more real assets to directionally attract more capital despite the overvaluation. The perpetually growing underlying assets from new capital allows earlier investors to benefit from later investors, and so on.
The name for this is "pyramid scheme".
PS. When you actually promise shareholders a dividend; so, you sell even more new shares so you can keep that promise to the earlier shareholders, and so on; then, that's called a "ponzi scheme".
hmmm, it is kinda like selling other things that you know are overvalued. And if Bitcoin is considered money, then you are selling it to get more savings in a hard curency.
Perhaps it's more speculation then arbitrage. You think it is overvalued, which means you think that in the future, when the truth get revealed, the price will be lower. Or speculation on the upside for the other asset - you think Bitcoin priced too low and it the future it will be higher.
Retardet Economics or something like that.
people in this thread are confused af
Current valuations are mostly calculated in earnings per share (EPS).
New valuations should be using ₿itcoin per share (BPS), especially for companies that actually hold ₿itcoin.
It's pretty crazy.
To me, it just highlights how wrong the current risk free rate is on fiat currencies.
I find the PE ratios on most stocks more crazy. Look at Microsoft & Meta's chart!
The mnav premium of Bitcoin treasury companies indicates holders either:
- can't directly access the underlying Sats; or
- assume they will acquire more Sats in he future to justify the premium
I find it all quite fascinating.
It might just be a fiat glitch really.
For some company it is very easy to contract huge amount of debt, the kind of debt individuals can't even dream about.
If you can just take on so much debt so easily and buy a hard asset with it. Why not do it.
Treasury companies looks like a joke but so is the financial system, it might just be an inevitable step in Bitcoin adoption.
Before state themselves realise they can take infinite amount of debt and buy a hard asset with it.
