Ammous claims that Bitcoin reserve companies are unmatched by Strategy
According to Saifedean Ammous, the author of "Bitcoin Standard" and an economist, Bitcoin reserve companies that are primarily established for buying Bitcoin may find it difficult to compete with Strategy of Michael Saylor.
In the latest episode of the Cointelegraph program “Proof of Thesis”, Ammous stated: “Apart from the Strategy of Michael Saylor, I don’t see any compelling reason to invest in another Bitcoin reserve company.”
According to the 8-K filing submitted on Monday by Strategy, the company holds the largest corporate Bitcoin reserve in the world, totaling 847,666 BTC, with a purchase cost of $63.95 billion. The company also reported holding $5.02 billion in cash reserves to cover preferred stock dividends and debt interest.
Ammous indicates that Strategy holds more Bitcoin, which allows them to borrow at a lower interest rate, giving them an advantage over smaller reserve companies. He said that several rounds of withdrawals in the past have not come close to causing the company to be liquidated.
This summer, Bitcoin fell below $60,000, and the trading price of the STRC preferred stocks of Strategy was far below their target price of $100, which has drawn close attention to the company's financing model as a result.
Strategy increased the annual dividend yield of STRC to 12%, repurchased some shares, and established a cash reserve. The company also sold some Bitcoin to help cover the dividends and repurchase STRC, and subsequently resumed its increase in Bitcoin holdings.
Ammous indicates: 'Even if Bitcoin experiences a more significant decline, their position will still be relatively stable, as they have sufficient cash on hand to fulfill their payment obligations.'
Ammous also indicates that companies with positive cash flows can invest their excess cash in Bitcoin as a long-term reserve asset; he added that he expects more companies to adopt this approach.
He said, "I think almost every company should do this."
However, he also distinguished between this type of reserve and the cash required for the company's daily, weekly, and monthly operations.
Nevertheless, Ammous still reminds that investing in Strategy itself carries risks, and indicates a preference for directly holding Bitcoin.
The next peak for Bitcoin may occur in 2029.
Ammous indicates that Bitcoin is likely to have hit bottom, although another sharp decline could still push prices even lower. He says that the next cycle high for Bitcoin could occur in 2029, and before that, prices will generally remain on the rise.
He said, "We might see another bottoming out, or we could witness another round of decline that pushes prices down even further."
Ammous indicates that as the market gradually forgets the memories of the previous bear market, smaller pullbacks may make Bitcoin more attractive to large asset management institutions.
When asked about his estimate for the price of Bitcoin in 2030, Ammous gave a best guess of around $200,000. He stated that this estimate is based on the Bitcoin power-law model, and he chose the lower end of the range he mentioned.
He added, "I won't bet on that."
