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Investing.com -- The rapid rise in companies adopting Bitcoin treasury strategies is starting to dilute the scarcity premium once enjoyed by early movers such as Strategy Inc., according to a note from Mizuho (NYSE:MFG) analysts on Thursday.
Following a dinner hosted with Jim Chanos, founder of Kynikos Associates, Mizuho noted growing concerns over the sustainability of elevated market net asset value (mNAV) premiums in the sector.
“According to Jim Chanos, the surge in Bitcoin treasury companies – now nearly 150 – that are issuing equity to acquire Bitcoin is beginning to erode the scarcity premium that is ascribed to first movers like MSTR,” Mizuho wrote.
Chanos is said to have cited unconventional entrants such as a Japanese nail salon (Convano Inc.), Spanish coffee company Vanadi, and Metaplanet as evidence of the copycat wave.
He believes this trend, if unchecked, could lead to a compression in mNAV multiples across the industry.
“The pace of Bitcoin treasury issuance – which is running at an annualized 8-10% of the U.S. savings rate – is unlikely sustainable,” Mizuho said, summarising Chanos’ view.
Chanos drew historical parallels with previous retail-driven booms, such as the 1989 European country fund craze and the 2000 dot-com spin-off surge, where premiums ultimately collapsed once supply overwhelmed demand.
Still, Mizuho maintains an Outperform rating on MSTR with a price target of $563.
“Higher Bitcoin prices and continued access to capital markets should allow MSTR to achieve positive Bitcoin yield,” Mizuho wrote, citing the firm’s ability to use its premium to accumulate Bitcoin at an implied discount.
Despite risks, Mizuho sees Bitcoin adoption and a favorable regulatory climate as tailwinds for MSTR’s long-term thesis.