Good, average, bad: Six scenarios analyzing the ultimate fate of crypto treasury companies

This article explores six potential endgame scenarios for crypto treasury strategy firms regarding their Ethereum holdings, ranging from positive to negative outcomes.

Good Ending 1 - Pocket: Firms cash out at a significant profit when crypto prices are well above their investment cost, often to meet shareholder or tax requirements. Such sales, even if transparent, may not severely impact the market due to the scale of their capital.
Good Ending 2 - Love Changes: After achieving substantial profits, a firm's strategy may evolve. Success with Ethereum might lead them to diversify and invest in other altcoins, shifting their treasury management approach.
Normal Ending 1 - Hedge Sales: If a firm believes its holdings have peaked, it may cease buying and begin discreetly selling through derivatives like contracts and options to lock in gains without causing major market panic.
Normal Ending 2 - No One Cares: Prolonged periods where the market net asset value (mNAV) falls below 1 may force a company to sell some assets to stabilize its valuation, as psychological anchors alone are ineffective.
Bad Ending 1 - Financial Pressure: External financial pressures, similar to Tesla's 2022 Bitcoin sell-off, could compel firms to liquidate a significant portion of their crypto holdings to address cash flow needs.
Bad Ending 2 - Stop Loss: If market conditions worsen and the cost of maintaining a position becomes unsustainable, a firm might be forced to cut its losses entirely and exit, hoping to re-enter at a lower price later.

The author notes these are long-term predictions and not indicative of a near-term bearish outlook, promising a future discussion on key indicators that might signal a market shift.

Author: 0xTodd

Good Ending 1 - Pocket

When the price of crypto assets is significantly higher than their investment cost, they cash out under shareholder/tax requirements, although the transfer address will slightly affect the floating profit.

WeStrategy had previously transferred some coins to "optimize taxes," but it did not cause any settlement or market crash.

But for their capital scale, it doesn’t matter. 3000, average cost 6000 to sell, big capital is already very happy.

Good Ending 2- Love Changes

If they make enough money, human nature is to replicate their own success. Someone who started out with Ethereum DAT might try to invest in other altcoins in the future, and at that point, they might switch gears.

Normal Ending 1 - Hedge Sales

If they think their holdings are nearing their ceiling, they will stop buying and even prepare to sell.

Even if their on-chain addresses are transparent, it does not prevent them from hedging in a low-key manner through contracts and options, thus retaining a little bit of the fruits of victory.

Normal Ending 2 - No One Cares

If mNAV is lower than 1 for a long time, the company will think that it is a loss to continue issuing additional shares, so it may sell some coins at this time to appropriately pull back mNAV.

According to my experience, of all the anchors in the world, only the "two-way anchor" is effective. No project can be anchored by "psychological anchor" alone.

Bad Ending 1- Financial Pressure

For example, Tesla was forced to sell three-quarters of its Bitcoin holdings in 2022 due to financial pressure. These institutions may face similar financial pressures at some point in the future.

Bad Ending 2- Stop Loss

If you do the opposite, the cost of building a position will be much higher than the current price, and the whole game cannot continue. One day you can only stop the loss and try to get it back through a lower bottom.

Of course, these are just long-term endgame predictions and do not imply a near-term bearish or negative outlook on DAT. While the drums continue to beat, we should keep playing and dancing.

As for when the drumbeat stops? That’s a topic I’ll discuss in my next post, focusing on three key indicators: cost of establishing a position, CEO/CFO/board turnover, and mNAV remaining below 1 for a prolonged period.