When price fluctuations coincide with shareholder pressure, even treasury companies can instantaneously shift from 'guardians' to 'sellers.' This article attempts to forecast potential market paths for BTC treasury companies over the next 6-12 months. This article is derived from a piece by Cheshire Capital, organized, translated, and written by Odaily Planet Daily. (Background: Pantera Capital Research: The Alchemy of BitMine) (Supplementary Background: Bitcoin Reserve Companies: Why Spend $2 to Buy $1 of BTC?) Editor's Note: In recent months, BTC treasury companies have been viewed as significant drivers of the crypto market and a strong foundation supporting Bitcoin prices. However, the reality may be far less stable than imagined. When price fluctuations coincide with shareholder pressure, even treasury companies can instantaneously shift from 'guardians' to 'sellers.' This article attempts to forecast potential market paths for BTC treasury companies over the next 6-12 months. Core Assumptions: Subjects: 10 BTC treasury companies holding varying amounts of Bitcoin, with market value net asset multiples (mNAV) ranging from 1.0x to 5.0x. Differences: Company quality is determined by treasury scale and management beliefs/marketing capabilities. Background: The initial price of Bitcoin was $120,000. Core Logic: Once some companies choose to sell BTC to repurchase shares, a self-reinforcing cycle will be triggered: price drops → mNAV under pressure → more companies forced to sell → intensified selling → further price drops. The original text is as follows: Assume there are 10 BTC treasury companies holding Bitcoin, and their trading premiums (mNAV multiples) on the secondary market vary from 1.0x to 5.0x. At this time, the BTC price is $120,000. Their qualities are uneven, where 'quality' depends on treasury size and the management's beliefs and marketing capabilities. Some lower-quality BTC treasury companies are the first to fall below 1.0x mNAV. For those teams lacking firm belief, the most rational move is to sell some Bitcoin to repurchase shares. After all, this can provide a net asset value enhancement effect per share in the short term. Note that these companies are selling some BTC at a price of $120,000. Due to the above sell-off, Bitcoin's price falls back to $115,000 (this price is mainly used to illustrate the scenario). Some other treasury companies (including those that have already conducted repurchases) see their mNAV continue to decline due to the highly correlated Beta effect with BTC. Consequently, another 4-5 companies sell Bitcoin to repurchase shares, and these companies sell at a price of $115,000. The market gradually realizes that among the ten companies, probably eight or nine care more about short-term shareholder defense rather than long-term BTC accumulation. Investors begin to anticipate that if these companies collectively need to sell 30% to 50% of their holdings, the results will be catastrophic. After all, even MSTR fell to a valuation level of 0.5 times during the low in 2022. Thus, BTC is quickly repriced to $100,000, and most treasury companies also fall below 1.0x. Some medium-quality treasury companies, which were originally hesitant, begin to face dual pressures from the market and shareholders, being forced to maintain mNAV, thus joining the sell-off. At this point, the market sees about $500 million to $1 billion worth of Bitcoin sell orders weekly. Even high-quality companies (like MSTR, 3350, XXI) struggle to defend when the price drops to about 1.2x. BTC drops to $90,000. The entire treasury company system, including high-quality players, falls below 1.0x. MSTR preferred stock falls below $0.70 per $1 par value, and there are even rumors in the market that Saylor is considering suspending dividends. Some companies previously thought to be staunch holders (like 3350, XXI) also begin to sell Bitcoin to cover operational costs. BTC drops to $80,000. By this time, most low-quality treasury companies have nearly emptied their BTC reserves. Early 'bottom fishers' begin to enter, but the cruelty of the self-reinforcing cycle is that sell-offs will spread up the quality chain, amplifying scale and speed. As medium to high-quality companies also capitulate, the largest Bitcoin holdings begin to enter the market, with weekly sell pressure reaching as high as $1.5 billion to $3 billion. It should be noted that aside from MSTR, BTC treasury companies collectively hold about 350,000 Bitcoins, worth approximately $40 billion at current prices. This sell-off could last a long time, and if MSTR is also forced to participate, it would be even more brutal, potentially causing BTC to drop to $70,000. Possible Outcomes: The lowest quality companies actually benefit. Because they were forced to sell BTC early, they avoided even lower prices. The issue is that once they sell, the company is no longer an 'iterative BTC treasury' but has transformed into a 'one-time valuation gamble.' Even if they only sell once, it will damage their reputation as 'diamond-hand treasury companies,' and future capital inflows will be significantly reduced. If one believes that BTC still has a 30-40% annual compound growth rate (I believe!), then companies that persist will ultimately be fine. As of now, I believe only Saylor will do everything possible to hold onto BTC, but there may be other candidates (like 3350, NAKA). However, before the majority of sell-offs are completed, no treasury company is worth a long-term bullish outlook. The moderates fare the worst. They are neither radical 'sharks' nor do they have enough belief. In the aforementioned scenario, such companies (like MARA, RIOT, SMLR) will sell in stages (6) to (7), with an average selling price of about $75,000. This logic also applies to treasury companies of other assets, but ETH may be an exception. Because ETH treasury companies have an oligopoly: BMNR and SBET hold about 75% of the treasury ETH (if including DYNX and BTBT, the proportion reaches 90%). This allows them to form some coordination or 'collusion' to avoid the vicious cycle of competitive sell-offs. Although the likelihood of maintaining such an agreement in the end is low, the probability of success will increase under a higher concentration of holdings. This can be compared to the banking syndicate during the collapse of Archegos in traditional finance. Radical banks (like Goldman Sachs, Deutsche) cleared their positions first, resulting in far better outcomes than those slow-motion players (Credit Suisse, Nomura) trying to coordinate an exit. Note: The BTC target price here is not $70,000; the prices in the text are only for illustrative purposes.

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