Bitcoin News: Treasury Stocks Bubble Warning Or Roaring ’20s Redux?

In 2025 Bitcoin news saw a wave of Bitcoin “treasury” stocks sweep global markets, prompting comparisons to the speculative investment‐trust mania of the 1920s.

At the peak of this crypto boom, small BTC‐backed stocks traded at stratospheric premiums (for example, one company briefly fetched 23× its Bitcoin holdings).

Notably, Be Water’s July 2025 analysis finds that today’s Bitcoin treasury companies and the 1920s investment trusts “reveal recurrent speculative pathologies” – offering “a blueprint for reflexive bubbles” that transcend era and asset class.

In both booms, investors were seduced by narratives of scarcity and easy money. Mid-1929 saw Goldman Sachs Trading Corp., dubbed “the MicroStrategy of its day,” with investors paying “double or triple” the value of underlying assets.

Yale economist Irving Fisher famously declared stocks on a “permanently high plateau” just before the 1929 crash. It resonates with the scenario today as Bitcoin bulls trumpet ever-higher targets.

Crucially, Fisher’s declaration was made defending 1920s trusts as market support. That is much like Michael Saylor today champions Bitcoin treasuries as a superior investment vehicle.

Bitcoin News: Sky-High Premiums and Valuation Risk For Treasury Stocks

Bitcoin treasury stocks have been trading well above the market value of their crypto assets, raising alarms about sustainability.

Other new issues on U.S. and international exchanges saw even wilder jumps – several soared into the double-digit multiples of NAV within days of going public.

In effect, investors bid up shares based entirely on the promise of future Bitcoin gains (and the companies’ marketing narratives) rather than on underlying earnings or cash flow.

This echoes the 1929 trust era, when buyers routinely paid premiums at IPO for promises of portfolio returns – to the tune of dozens of percentage points.

Be Water notes that today’s treasuries feature the same “massive mNAV premiums” and “reflexive feedback loops” seen in the 1920s: rising share prices feed more leverage, which in turn further inflates the assets’ value.

This price euphoria has already reversed sharply. According to a July 2025 survey, over half of BTC treasury stocks launched in 2025 trade at least 50% below their year-to-date highs. (The median drop from the peak is roughly –52%.)

Wall Street analysts warn that what goes up 10×–20× can come crashing down just as fast. As one researcher quipped, traders recently watched Bitcoin company stock prices “go down, down, down” in panic, with no institutional buyers or bankers stepping in to prop them up.

In short, the extreme premiums (the “BTC premium-to-NAV” valuations) pose huge risks: if Bitcoin price or investor sentiment reverses, these stocks could crash far harder than Bitcoin itself.

Dilution, Leverage, and “Financial Alchemy”

A key driver of both eras’ bubbles was aggressive financial engineering. Modern Bitcoin treasury companies have strutted onto exchanges with complex capital structures: common shares at a premium, plus layers of convertible debt, preferreds, and warrants.

As Be Water observes, “the capital structure of 1920s trusts is virtually indistinguishable from MicroStrategy today.”

Both issued equity at large premiums, then sold bonds (often convertible to stock) and preferred shares to attract extra financing.

In the 1920s, American trusts popularized selling speculative bonds and attaching warrants. That’s just as Saylor has sold convertible debt and stock options.

Galbraith noted the effect was to create “an endless supply of speculative securities” to meet insatiable demand.

Founders and early promoters have benefited similarly. In 1929, trust IPOs, sponsors received low‐priced share allocations and warrants that they could instantly flip at inflated market prices.

Be Water cites one analyst’s account: buyers “were willing to pay a sizable premium” at IPO, while insiders “received allotments of stock or warrants… which they were then able to sell at once at a profit.”

Today, founders of crypto treasury firms often get large equity grants or founder shares at the NAV price and tight lockups. That can translate to windfall gains if the public eagerly buys the stock above NAV.

Bloomberg Bitcoin news notes MicroStrategy’s Phong Le describes this explosion of leverage as “financial alchemy,” quipping, “Some call it alchemy. I call it valuation.”

This engineering also implies dilution risk. None of the Bitcoin treasuries have operating revenue; they raise fresh capital to meet obligations.

Bitcoin News: Speculative Fervor and Fanaticism

Be Water points out that, like 1920s trusts, many are effectively pyramid schemes: to pay bond coupons or preferred dividends, they issue new shares or debt, relying on rising mNAV to justify each new issuance.

In short, investors are paying today for promises of tomorrow’s Bitcoin gains. Even Michael Saylor openly credits convertible bonds and warrant issuances for “defending” MicroStrategy’s Bitcoin holdings.

But as Be Water warns, this “pyramid-like” model only works while Bitcoin’s price and capital access remain robust. Flood the market with too many leveraged Bitcoin plays – or see a serious down cycle – and the whole scheme could unravel just as the 1920s trusts did.

Investor psychology has only magnified these parallels. In the 1920s, Galbraith wrote, it was “a golden day for the promoter,” with rampant speculation allowing “all manner of dubious financial practices” to flourish unchecked.

Today’s market has felt similar frenetic greed. Small-cap, little-known companies have been celebrated for mere promises to hoard crypto.

A recent analysis found pitch decks filled with flashy charts, lavish bonus structures, and aggressive dilution plans – echoing 1929 trust filings. Crypto media personalities and retail “grammers” hype each new treasury ticker as the next big score.

Yet the same behavioral extremes appear on the downside. Just as 1929’s crash was marked by a “wild scramble to ‘sell at the market’,” today’s selling has often been sudden and savage.

As Be Water ominously notes, reflexivity can cut both ways: if Bitcoin falters and these stocks trade persistently below NAV, “common equity could be wiped out just as it was for the trust shares of 1929”. In other words, when the music stops, founders and last investors – not boards or sponsors – suffer total losses.

A Cautionary Lens

The key question – “are we in a bubble?” – may miss a deeper point: these crypto treasury trades test timeless market dynamics.

Be Water’s analysis stresses that the 1920s episode offers “more than mere historical parallels,” illuminating the “immutable aspects of human nature and financial reflexivity” behind any credit bubble.

Its July 2025 report concludes that the fate of those trusts,

“…provides a dispassionate lens through which to view not only the emerging Bitcoin treasury phenomenon. However, the recurring dynamics of financial alchemy that define bubble formation across centuries…”

In practical terms, the alert is clear. There are valid bullish arguments for Bitcoin exposure, but much of today’s Bitcoin-stock rally is built on narrative and leverage, not new earnings or fundamental demand.

As market pros warn, bubbles grow as long as skeptics are called foolish. History tells us they end when everyone finally utters Fisher’s words in reverse.

With insider dilution, huge premiums, and Fed liquidity fueling the frenzy, investors would do well to remember 1929’s lesson: speculative manias peak when caution is most dismissed.

Only time will tell whether these Bitcoin public companies herald a new digital golden age or simply a flash in the pan of 2025’s crypto bubble.