Let’s face it, for better or for worse, Michael Saylor’s MicroStrategy has been the poster child for corporate Bitcoin adoption over the past couple of years. They weren’t just testing the waters, though – they were diving headfirst into the deep end. But are their days numbered? The rise of 21 Capital, backed by some serious heavy hitters, suggests the landscape is shifting, and it's time to ask:
Can Bitcoin Have Too Many Kings?
MicroStrategy's strategy has always been straightforward: buy Bitcoin, hold Bitcoin, repeat. Their stock, MSTR, quickly became a de facto Bitcoin ETF for many investors before the real ETFs finally came in 2023. 21 Capital is in a completely different ballpark. They’re adding Bitcoin-native metrics such as Bitcoin Per Share (BPS). It's a fascinating shift, and it raises a critical question: is indirect exposure through a company stock the best way to value a Bitcoin-centric investment, or is a direct, Bitcoin-focused metric superior?
Think of it like this: MicroStrategy is like investing in a gold mining company. You come to understand why gold is so expensive. The company’s ultimate success is contingent on operational expenses, management choices—and a whole host of other matters. 21 Capital, with its BPS metric, is attempting to provide an experience much more akin to actually owning the gold.
Now, you might be thinking, "So what? More players in the game is good for Bitcoin, right?" Maybe. A competitive demand for a fixed-in-supply asset like Bitcoin may lead to a supply squeeze. Max Keiser's prediction of Bitcoin reaching $2.2 million might sound outlandish, but if institutional FOMO kicks in, fueled by this competition, it's not entirely impossible. Anxiety could be the biggest feeling in play here – the anxiety of missing out on the huge windfall that could be reaped.
Bitcoin Per Share: A Real Innovation?
21 Capital’s BPS metric is a direct affront to the traditional stock valuation techniques used to evaluate MicroStrategy. That’s an audacious step! This move forces us to reconsider how we rate firms that act as de facto Bitcoin treasuries.
Consider this: Is MicroStrategy's stock price truly reflecting the value of its Bitcoin holdings, or is it being influenced by market sentiment, broader economic trends, and Saylor's sometimes... eccentric... pronouncements? BPS seeks to simplify things and deliver a much clearer measure of a company’s Bitcoin backing. It doesn’t make much more sense, for example, to compare the net asset value (NAV) of a closed-end fund to its market price. A significant divergence could signal an opportunity.
BPS isn't a silver bullet. It glosses over the operational risks that you take on when you operate a large business. Second, it does not account for MSTR’s ability to develop new revenue opportunities outside of simply holding Bitcoin. It’s not a better lens, just a different one.
This delightful and surprising connection, though, transports me back to the fun of early internet days. At that time, firms were measured based on their “eyeballs” and “pageviews” rather than revenue and profit. We all know how that ended. Will BPS meet a similar outcome, or will it emerge as the de facto measure for Bitcoin-focused investments going forward?
Will Regulators Allow Bitcoin Empires?
MicroStrategy’s meteoric rise and the recent birth of 21 Capital signals a sea change and presents some potentially grave regulatory concerns. So, just like the first wave of Bitcoin collectors, these companies are quickly amassing BTC. Will regulators take action to ensure that they do not become excessively dominant? Might we see new regulations to prohibit corporations from holding Bitcoin, or at least to require more transparency about such purchases?
Consider it as kind of anti-trust laws for the digital age. Where are we going? The future could very well be one where only a few companies hold most of the Bitcoin. And if they are, what does that mean for the future of decentralization and the general long-term health of the Bitcoin network?
This is not only at stake for investment strategies, but the future of Bitcoin itself. Dormant Bitcoins are waking up, Bitcoin ETF inflows are hitting record highs. Further, the fact that Kraken of all exchanges listed BNB suggests that the market was maturing rapidly. With maturity comes scrutiny, and with scrutiny comes regulation.
Get ready for increased competition, increased innovation in Bitcoin investment strategies, and a hell of a lot more regulatory uncertainty. The race to stock up on Bitcoin is heated and the hunters have become larger and larger players in the marketplace. Whether MicroStrategy can maintain its lead remains to be seen, but one thing is certain: the Bitcoin landscape is about to get a whole lot more interesting. Are you ready for it?
