$BTC

What do ICOs and Bitcoin treasury companies have in common?

While most crypto influencers are busy highlighting the growth of Bitcoin treasuries’ BTC holdings and presenting new purchases as “bullish,” many in the crypto community find the latest trend disturbing. They emphasize that these companies are rooted in TradFi and present regular public and private companies, except that they don’t produce anything and just buy Bitcoin using borrowed assets.

More than that, critics are concerned about possible risks as all these companies are centralized. As many of them are seemingly driven by FOMO and don’t have elaborate risk management strategies, they may end up not as sustainable as Strategy who managed to survive the 2022 crypto winter. Experts warn that newer companies may have to sell their bitcoins when the bear market starts. If it happens, it may trigger the ripple effect that would impact giants, including Strategy.

Some compare Bitcoin treasury companies’ hype with the ICO era hype and remind everyone that it ended in a disaster. In 2018, the crypto market lost 85% of its value. This crash was harder than the market crash associated with the dot-com bubble burst that triggered a 78% drop. By December 2017, less than a third of companies that ran ICOs reached the goals of their campaigns.

Proponents of Bitcoin treasuries notice that comparing ICOs and treasuries is not correct. The line between the two is that Bitcoin treasuries are legitimate public and private companies that allow their clients to benefit from Bitcoin price movements through a standard method, such as shares. At the same time, ICOs were dubious firms that just promised to create something valuable–”were selling vaporware,” as Joe Consorti, working for Theya and Horizon, put it in his tweet.