One of the important pieces of advice that I received since entering the cryptocurrency market was: “There are no gods in Bitcoin.” 

This extends to the entire crypto market. As time goes on, you begin to learn this painful lesson over and over again.

Looking back on Bitcoin’s history, there have been countless times when a person or group began to believe that they were vital to this market, or even smarter than it. That is exactly the moment that they fly too close to the moon and have their wings clipped. Only to crash and burn into the ground horribly. 

Over the years, we have seen the likes Do Kwon, Sam Bankman-Fried (SBF), Roger Ver, Su Zhu of 3 Arrows Capital, and Alex Mashinskey all rise up to prominence and disappear into disgrace. The list goes beyond those people seemingly endlessly. For example, when Elon Musk began to put Bitcoin on the balance sheet of Tesla, he was seen as the potential savior of Bitcoin that would pump the price of BTC to unprecedented levels. However, once Tesla sold a portion of those coins, a large percentage of the BTC community looked at him with disdain. That disdain extended even further once Elon started shilling Dogecoin and other meme tokens. The “chosen one” went to the dark side.

Fast-forward to crypto today, and the clear narrative that is driving the market are Bitcoin and crypto treasury companies.

With people such as Michael Saylor of Strategy (Microstrategy) becoming almost a mythical figure. He was the person who first began this treasury company trend and is likely the reason so many others have followed suit. Strategy now owns over 500,000 Bitcoins and is definitely one of the key reasons why the price of BTC rose to $120k. They are potentially one of the largest catalysts for why Bitcoin hasn’t dropped even further, even during times of FUD. With that amount of buying, any large amount of sell pressure is gobbled up quickly. 

This has been amplified even further with several other new Bitcoin treasury company entrants in the market. MetaPlanet, 21, and the new Canter Fitzgerald $4 billion BTC startup are just a few examples.

Going even further, treasury companies have become very popular recently on Ethereum as well. With big players such as Tom Lee, Joe Lubin, and Peter Thiel all starting their own ETH treasury strategy, aiming to become the Microstrategy of Ethereum.

In the short term, this is incredibly bullish.

We have never seen such strong buying pressure in the crypto market. This will result in prices going higher than any of us could have ever imagined. As the days go by, it is becoming clear that there has never been a better chance for the crypto “super cycle” to finally occur. The cycle OG bitcoiners have been declaring for years that would cause the largest transfer of wealth the world has seen in recent memory.

The cycle when those who have been diligently investing in crypto will become the haves. And those who haven’t will become the have-nots.

This all sounds incredible, but there is a caveat. What goes up, must come down.

These crypto treasury companies are essentially levered longs. Taking on debt so that they can buy more Bitcoin or Ethereum. When prices go up, it seems like nothing can go wrong. However, when prices dip, that is a whole different story.

The most important thing in crypto to remember is that this market has an unusually high number of black swan events that occur. Events that cause panic with people trying to run for the exits. When something goes wrong with one of these treasury companies, they will be forced to sell quickly.

With the amount of selling pressure coming from them, it will cause prices to drop, resulting in market panic. This could cause other treasury companies to do the same thing. It's not inconceivable that hundreds of thousands or even over a million Bitcoin could be sold into the market within minutes. Causing liquidations similar to the March 2020 Covid price drop, where there was a real threat of BTC’s price going to zero if “Bitmex hadn’t unplugged their system.”

While these companies are seemingly the heroes of the crypto market today, and are the largest reason why prices have been surging. The harsh reality is that they are also the biggest potential threat currently to Bitcoin and the crypto market.

How about you? How do you feel about these Bitcoin and Ethereum treasury companies?

As always, thank you for reading!