IN TODAY'S ISSUE:
- “Corporate bitcoin treasuries” are now morphing into “bitcoin treasury corporations” in the latest iteration of bitcoin buyers.
- The potential demand from these companies, which continue to spring to life, measures nearly 70% of the US ETF market.
- Financial markets have rebounded from their tariff-induced lows, but the weak US dollar and elevated rates on US Treasuries are positive omens for bitcoin.
"Corporate Bitcoin Treasuries" Give Rise to "Bitcoin Treasury Corporations"
Corporate treasury adoption of bitcoin has entered a new phase in recent weeks, marked by the emergence of public companies whose primary objective is to accumulate as much bitcoin as possible. Firms like Twenty One, Strive Asset Management, and Nakamoto have either gone public or announced plans to do so via SPAC transactions or reverse mergers. Unlike the first wave of corporate bitcoin adopters—such as Strategy (formerly MicroStrategy), Tesla, Block (formerly Square)—these new entities are purpose-built from the ground up with bitcoin accumulation as their core mission, rather than adopting it for investment purposes in addition to a core business.
The market development comes as no surprise to us. We have long wondered why, given Strategy’s eye-popping returns, more companies haven’t chosen to hold bitcoin on their balance sheet. The likely reality is that most public companies lack the corporate structure to support such bold decisions—but those that do and have taken the leap have been handsomely rewarded.
There are some important market implications for the emergence of these companies, chiefly the potential demand for bitcoin. Because these companies can issue a mix of equity and debt, usually in the form of convertible notes, and use the proceeds to buy bitcoin, there is huge latent demand for bitcoin. The way to think about it is that the collective dollar premium that these companies trade to their underlying net assets (cash, bitcoins, and operating company minus debt not accounted for in share dilution) represents the amount of capital the company can raise and buy bitcoins. Right now, that totals nearly $82B, making some estimates for pro-forma share counts and bitcoins held.
To put that $82B in perspective, the total US spot ETF market, the most successful launch in the history of markets, is “only” $121B. Bitcoin treasury corporations have 68% of the buying power of the entire US spot ETF market at their disposal. That’s a lot of dry powder.
Financial Markets Claw Back Losses, but Scars Remain
Signs of market stress have receded, signaling a stabilization in investor sentiment following months of turbulence accompanied by the changeover in the administration. Bitcoin has once again surpassed the $100,000 threshold, while the S&P 500 and Nasdaq 100 have erased much of the post-inauguration day drawdown. Notably, both indices are now trading above their levels prior to “Liberation Day,” when the administration unveiled its sweeping “reciprocal tariffs.” Traditional “haven trades” like gold and the Swiss Franc have cooled off as well, underscoring investor appetite for risk once again.
Yet even as markets recover from what many view as self-inflicted policy shocks, key warning signals remain. The US dollar remains weak and nominal Treasury yields remain elevated—an uneasy combination that suggests underlying stress in sovereign credit and inflation. Let’s examine what these signs could signal for bitcoin and broader macro-financial conditions.
US Dollar Falls
One of the notable beneficiaries in the wake of the US election in November was the US dollar. Hopes for renewed economic growth, less government spending, lower inflation, and US protectionist policies sent the dollar higher. Unfortunately, what the US dollar got once Trump took office was pushback on tariffs. With retaliatory measures taken in response to the US’s actions, the net effect could be seen as a neutralizing factor on the US dollar strength for US exporters, but inflationary for consumers of US imports.
What the administration would like is what has been happening to some degree – a weaker dollar. The idea is that because of the US dollar’s role as the world’s reserve currency, it is overvalued, negatively affecting US exports and manufacturing. Given Trump’s focus on reshoring the US economy, a strong dollar is a major hindrance to that plan (conversely, a strong dollar makes US imports cheaper). While the idea of a coordinated plan to devalue the dollar (while simultaneously renegotiating terms on US debt) has been rumored under the so-called “Mar-a-Lago Accord,” no such plan has come forth.
Bitcoin would likely be a beneficiary of a weaker US dollar, along with other stores of value and hard assets – gold, real estate, commodities, even stocks to some extent. Essentially the same assets should benefit during inflationary periods.
US Treasury Yields Rise
A major complication for the administration’s economic maneuvering has been the bond market. While Trump has been outspoken in his desire to see lower interest rates, neither investors nor the Fed has followed suit. Investors have pushed 10-year Treasury yields higher—effectively selling U.S. government debt—while the Federal Reserve has remained on hold, waiting to assess how political developments might affect inflation and employment.
On the fiscal front, the White House recently proposed a fiscal year 2026 budget that includes a 7.6% cut ($139.9B) to discretionary spending. At the same time, it's pushing for new tax cuts estimated at $4 trillion over the next decade, according to the conservative-leaning Tax Foundation. The numbers simply don’t add up, especially if you're a holder of US Treasuries or US dollars. We've previously written about U.S. public finances and the dollar being subject to a “tragedy of the commons,” where short-term political incentives drive excessive spending today, leaving the burden for future policymakers and taxpayers.
Once again, it appears Washington is reverting to its old habits of expanding deficits and debt after a brief flirtation with reshaping the global financial order. Both the bond market and the dollar are flashing similar warning signs: rising inflation, elevated credit risk, and declining US global dominance. In the long run, all of this should work in bitcoin’s favor.
Market Update
Bitcoin rallied 1.8% on the week and now sits only a short distance from its all-time high. Equity markets soared higher too this week, with the S&P 500 up 4.5% and the Nasdaq Composite up 6.7%. The gold trade seems to have cooled after peaking just after the “Liberation Day” event, while the economically sensitive oil was up 2.9%. Bonds were mixed with investment corporate grade and high yield corporate debt rallying, but long-term US Treasuries were down on the week.
Even though bitcoin is a stone’s throw away from its all-time high, the recent rally in spot has been noticeably quiet. The basis on CME front-month contracts is still high single-digit percentages, the funding rates for perps on an open interest weighted basis are only 5.7% on an annualized basis. Volatility, both realized and implied, continues to fall. Altcoins just showed their first sign of life in many months late last week. These are not the hallmarks of an overheated market.
Important News This Week
Investing:
Raising Debt to Buy Crypto Doesn’t Work as Well as It Used To - Bloomberg
Short Strategy Buy Bitcoin, That's Jim Chanos Crypto Bet - CoinDesk
Basel Medical Group Ltd Kicks Off Us$ 1.0 Billion Bitcoin Acquisition Strategy Move - Basel Medical Group
Regulation and Politics:
SEC Chair: Blockchain ‘Holds Promise’ Of New Kinds of Market Activity - Cointelegraph
CFTC's Pham Said to Plot Exit, Agency May Be Left Without a Party Majority - CoinDesk
Treasury Secretary Debt Limit Letter to Congress - US Treasury
Companies & Technology:
BTC Price Stable as Bitcoin Developers Plan OP_Return Removal - CoinDesk
Robinhood Enters Canada by Taking Over Crypto Exchange WonderFi for $179M - CoinDesk
Protecting Our Customers - Standing Up to Extortionists - Coinbase
Wintermute Expands to NYC And Taps Policy Veteran Ron Hammond Amid a Friendlier Regulatory Shift in the US - The Block
Upcoming Events
May 27 - Bitcoin 2025 conference
May 30 - FTX to distribute $5B to creditors
May 30 - CME expiry
Jun 18 - FOMC interest rate decision
Jul 2 - Final SEC deadline for decision on GDLC ETF conversion
Jul 8 - 90-day tariff suspension ends
Jul 22 - EO Working Group report deadline
