IN TODAY'S ISSUE:
- Improving upon bitcoin treasury metrics.
- Important takeaways from the Bitcoin conference in Vegas as bitcoin treasuries, politics, and yield take center stage.
- Bitcoin’s price may be suffering from a post-conference hangover, but we’ve seen this phenomenon before.
Enhancing Bitcoin Treasury Company Measures
Bitcoin treasuries companies continue to be one of the most highly discussed market developments over the past few months. It seems that every few days, a new company or market development springs forth, with the most notable development being Trump Media and Technology Group’s (DJT) recent announcement. These strategies haven’t been without their controversy, however, with noted short seller Jim Chanos going public on his Strategy (MSTR) short position (long bitcoin as a hedge against it).
The only thing that seems to outpace the development of bitcoin treasuries is the advent of metrics designed to track their metrics. “Bitcoin yield,” “mNAV,” “days to cover mNAV,” and their ilk have all entered the investing public vernacular.
The most important metric for a bitcoin treasury is the premium it trades at relative to its underlying net assets, including any operating company (opco) – its cash plus bitcoins plus opco minus obligations like debt and preferred stock. It’s this premium that allows these companies to convert stock for bitcoins, effectively acting as a money changer converting shares for bitcoins.
It is a popular misunderstanding that these vehicles are simply levered bets on bitcoin. Yes, these companies are issuing debt and levering up their balance sheet, but that has been mostly in the form of convertible notes (and convertible preferred stock). Because the industry has coalesced around the concept of “assumed shares outstanding,” which includes the full share dilution from these convertible note issuances, regardless of whether the notes have satisfied conversion requirements, investors are being encouraged to think of this debt as equity dilution instead, calculated at the conversion premium.
On one hand, this practice of accounting for the full effects of convert dilution could be considered conservative, especially when analyzing a metric like “bitcoin per share,” which is based on “assumed shares outstanding.” On the other hand, the implication is that the convertible note will be settled for shares with certainty, when the reality is that conversion triggers may not be met, and the notes may need to be paid back with cash. If the company doesn’t have the cash on hand to pay back note holders, it may be forced into even more dilutive transactions to raise the necessary cash.
The irony is that when a company sells a convertible note, it is inherently selling a fixed coupon bond plus a call option on its equity. That call option, because of how options pricing works, is more valuable the higher the volatility of the equity. Therefore, it is in a bitcoin treasury company’s best interest, to maximize the value of this call option, package it up, and sell it to convertible note investors and acquire bitcoins. This is all provided the company doesn’t default on its obligations, impairing the equity value.
With that in mind, a more thorough analysis of these companies should include a more comprehensive analysis of their “net asset value.” Metrics like “mNAV,” the market cap to bitcoin holdings, are woefully deficient in comparing bitcoin treasury companies across the spectrum accounting for opco (we use the enterprise value right before bitcoin treasury was announced as a market-based method to value the opco) and capital structure differences. The following table corrects these distortions, using reported numbers where available and, in the case of deals that have yet to be closed, proforma financials and bitcoin holdings given by the company.
Bitcoin’s Post Vegas Hangover
Last week, the Bitcoin world descended on Las Vegas for the industry’s biggest conference of the year, Bitcoin 2025. The annual conference, hosted by BTC Media, brought together 35,000 Bitcoiners from all over the world to celebrate all things Bitcoin. Individual investors, service providers, and institutional investors – the one thing they can agree on is their appreciation for Bitcoin.
Several themes were prevalent in the formal presentations and through our informal discussions in Las Vegas. First and foremost were bitcoin treasuries and treasury companies. Punctuating that was the announcement from Trump Media and Technology Group (DJT), the public company whose largest shareholder is the President, which announced a $2.5B bitcoin treasury financed by the sale of stock and convertible notes. Strive also announced a $710M PIPE financing, the proceeds of which will go to the purchase of a bitcoin treasury.
Politics and regulation played a prominent theme throughout the event, and while President Trump didn’t make an appearance, like he did last year when he was still candidate Trump, Vice President JD Vance did. Also appearing were Eric and Donald Trump, Jr., who have been the crypto business-facing members of the family, as well as AI and Crypto Czar David Sacks; Bo Hines, Executive Director of the President’s Council of Advisors for Digital Assets; Senator Cynthia Lummis; and SEC Commissioner Hester Peirce. In general, the attitude and tone were supportive of many of the ongoing initiatives to provide regulatory clarity and legislation where needed, such as in stablecoins and market structure.
With most, if not all, of the conference participants already sold on the idea of bitcoin (why else would they be in Vegas?), many of the conversations were around how to make bitcoin a productive asset. It’s well understood that bitcoin’s chief function, at least right now, is to appreciate (or depreciate). But with innovations such as defi, cross-chain bridges, staking and restaking, as well as derivatives markets and lending opportunities, much of the discussion was about how to generate returns on bitcoin. With a collective market value of over $2.0T, most of it sitting idle, bitcoin has a lot of value with which to generate additional returns. Lending, options strategies, defi, staking – broadly bitcoin yield, was highly topical (not the “bitcoin yield” metric devised by bitcoin treasury companies, actual returns). Given the amount of capital available, this is an area of broad and growing interest.
Unfortunately, despite all the excitement and energy around the conference, it failed to be the price catalyst many had hoped for. Many have asked why price has languished post-conference. This is a familiar story, however. Big events like the annual Bitcoin conference rarely result in price appreciation following the event. Most of the outperformance typically comes ahead of the event, while price typically falls in the wake. This year is proving to be no different.
Market Update
Bitcoin declined by 3.6% over the past week, a move we attribute in part to a post-conference cooldown following the events in Vegas (see prior section). Amid the ongoing spat between Donald Trump and Elon Musk, bitcoin briefly dipped to $100,500 before recovering modestly.
Meanwhile, equities continued their recovery from their tariff-induced drawdowns. The S&P 500 now trades less than 5% below its all-time high set in February—a notable rebound given the persistent geopolitical and macroeconomic uncertainty stemming from the Trump administration’s evolving trade, economic, and political policies.
In such an environment, where the "rules of the road" are unclear, it becomes increasingly challenging for firms to make long-term strategic plans, let alone short-term operational decisions. With key items like the tariff landscape far from settled, the full economic impact of these policies may not be fully felt.
Important News This Week
Investing:
US Debt Crisis Could Make Bitcoin the World's Reserve Currency: Coinbase CEO - Decrypt
U.S Dollar to Slide Further This Summer, Bank of America Warns - CoinDesk
Geologists Stumbled Upon the Largest Gold Mine in the World - Popular Mechanics
JPMorgan Plans to Offer Clients Financing Against Crypto ETFs - Bloomberg
Politics and Regulation:
Former DOGE Head Elon Musk Blasts U.S. Spending Bill as Debt Nears $37T - CoinDesk
Fed’s Bowman Confirmed as Vice Chair for Supervision; Lummis Calls It a Win for Crypto - The Block
'Truly Infuriating': SEC Technical Briefing on Crypto Bill Sparks Blowback from House Democratic Staff - The Block
Companies:
Apple, X, And Airbnb Among Growing Number of Companies Exploring Crypto as Big Tech Eyes Stablecoins - Fortune
Meanwhile Shares First Audit - CoinDesk
Trump Media Closes Bitcoin Treasury Deal - Trump Media
Trump Crypto Feud Heats Up with Cease-And-Desist Letter - Bloomberg
Upcoming Events
Jun 11 - CPI release
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
