Experts say the Bitcoin strategy still works, but the window for it to be replicated is narrowing.

Experts believe that simply acquiring and holding Bitcoin is no longer enough for Bitcoin-backed companies looking to replicate Strategy's success.

Deep disappointment that goes beyond Bitcoin price volatility

The high-risk strategy of Bitcoin treasury firms attempting to replicate the success of pioneer Strategy is failing to generate profits, and significant investor losses demonstrate that this model is not a simple recipe for massive profits. Over the past three months, investors' capital in BTC clone firms has been wiped out by significant declines.

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It's important to note that these stock price crashes began well before Bitcoin's recent volatility, with the cryptocurrency fluctuating from $126,000 on October 6 to below $105,000 by October 17. This suggests that the negative sentiment is driven by deeper market disillusionment, not simply by BTC's latest correction.

Inconsistent results and poor investor sentiment indicate that simply buying and holding Bitcoin is no longer enough. Strategy's first-mover advantage was built on unique timing, institutional access, and relentless promotion by CEO Michael Saylor—factors that are difficult for newcomers to replicate.

Some experts, however, attribute the discounts at which many companies with BTC treasuries trade to structural and management flaws that undermine investor confidence. They note that high operating expenses, low liquidity, and poor capital allocation discipline often lead to a decline in the share price of these companies relative to their Bitcoin holdings. Many also argue that these companies do not provide sufficient returns and lack compelling strategic value to offset the additional levels of corporate risk.

Others, like Brian Trepenier, founder and president of On-Demand Trading Inc., believe markets punish exaggeration and poor execution. “Markets punish poor execution, weak governance, and a lack of transparency. When companies rely solely on market hype and don't offer a real operating plan, investors view them as speculation rather than market value,” he said.

The Dilution Trap vs. Strategy's Debt Model

Unlike many BTC firms that raise capital through equity issuance, thereby diluting shareholders' stakes, Strategy used convertible debt, preserving capital and attracting investor interest as a reliable proxy for BTC. Meanwhile, Trepenier argues that current approaches—issuing preferred shares without a clear path to value—signal desperation, not strategy. “You can't fool the market with financial manipulation, especially when Bitcoin exposure can be more accurately replicated through ETFs,” he noted.

Mete AI, founder of ICB Verse, agrees, stating, “The market interprets this as desperation, not conviction. As a result, dilution risk increases faster than the BTC valuation, destroying the long-term value of shareholders' shares.” He advises investors to focus on metrics like the “BTC-backed liquidity ratio,” which measures companies' ability to cover expenses for 12-18 months without selling Bitcoin.

Still, some experts attribute Strategy's success to luck, first-mover advantage, and the reputation of founder Michael Saylor. Ivo Georgiev, CEO of Ambire, notes that without Saylor's “heroic” story, Strategy's achievement would be difficult to replicate.

While Strategy's model isn't impossible to replicate, experts like Trepenier believe the window of opportunity has narrowed. Success now requires management excellence and a true long-term vision. Mete AI adds: “The next generation of treasury firms must combine Web3 strategy with asset management discipline—not simply imitate Strategy's financial engineering.”

FAQ

• Why are companies with BTC treasuries trading at a discount? These companies trade at a discount due to poor management, high operating costs, and a lack of transparency, which undermines investor confidence.
• Is simply holding Bitcoin sufficient as a business strategy? No, experts agree that simply holding Bitcoin is an outdated model and insufficient for creating market value today.
• What should the next generation of treasury firms do? Future success requires integrating BTC reserves with real-world applications, such as payment networks, to generate productive returns and strategic value.
• Why did Strategy succeed where others failed? Strategy benefited from a unique, temporary first-mover advantage and the choice of convertible debt financing, which avoided share dilution, unlike its current subsidiaries.

Source: cryptonews.net