Public Firms Turning to Altcoin Holdings Face Skepticism from Analysts
A wave of public companies appears to be adopting altcoin accumulation strategies in an effort to replicate the massive gains seen by MicroStrategy’s bitcoin treasury approach. But while the model proved effective with bitcoin — driving MSTR’s share price up over 3,000% since 2020 — analysts warn that similar moves with smaller altcoins may be far riskier.
Since 2020, MicroStrategy has accumulated 2.9% of all bitcoin that will ever exist, positioning itself as a corporate crypto pioneer. Its success has inspired other firms to build cryptocurrency reserves, with a growing number now eyeing alternative tokens like ether and even lesser-known altcoins to attract investor interest and boost equity value.
According to a Friday report by the Financial Times, this next wave of treasury diversification is drawing skepticism from market experts who question the sustainability of such moves.
Shell Companies, Token Buys, and Short-Term Pops
The FT report highlights several examples of this trend. Blockchain platform Avalanche is reportedly exploring a deal to sell a portion of its AVAX tokens to a publicly listed shell company, which would then aim to earn yield and draw investor interest. Meanwhile, Canadian investment firm RSV Capital is said to be seeking $200 million in equity to buy The Open Network’s native token, TON, using a similar shell structure.
One recent example that grabbed headlines came from Litecoin co-founder Charlie Lee, who invested $100 million into MEI Pharma (MEIP) to enable the company to purchase LTC. MEIP shares briefly spiked 17% following the announcement before giving up most of the gains. As of writing, the stock remains up just under 5% for the week.
Analysts Warn of Speculative Excess
Despite initial price boosts, analysts are questioning the long-term viability of this altcoin treasury model. Eric Benoist, a tech and data strategist at Natixis CIB, called the approach “hugely speculative,” adding that such companies will ultimately be valued based on the crypto holdings they maintain — and not much else.
“That’s not going to save them for very long,” Benoist said. “If the underlying token falls, the company’s valuation could collapse right alongside it.”
Geoff Kendrick, global head of digital assets research at Standard Chartered, echoed that sentiment, describing these strategies as “a flash in the pan.” He warned that any sharp decline in token prices could inflict heavy losses on equity holders or bond investors.
Altcoin Treasury Plays Still Unproven
While bitcoin-focused treasury strategies have gained mainstream credibility, efforts to apply the same playbook to smaller altcoins remain highly speculative. Though a few public companies may benefit from short-term investor attention, the long-term fundamentals — and potential downside — have prompted many in the financial world to urge caution.
