From Nasdaq
May 15, 2025 3:06 am:

Wall Street has a new obsession with artificial intelligence (AI) since the fourth quarter of 2022, as software and systems gain the ability to reason and act without human intervention. Meanwhile, companies are pivoting to Bitcoin treasury strategies, buying and holding Bitcoin as a hedge against inflation and for long-term returns.

Strategy, previously known as MicroStrategy, became a pioneer in the Bitcoin treasury strategy by purchasing 21,454 Bitcoin in 2020. With its Bitcoin holdings now at 568,840 tokens, Strategy’s stock has surged by over 2,900%. CEO Michael Saylor has capitalized on Bitcoin’s perceived scarcity and historical returns, attracting investors with its innovative strategy.

Despite the success of the Bitcoin treasury approach, there are concerns about the long-term sustainability of this strategy. Companies diverting cash reserves into Bitcoin may lack innovation in their core operations, potentially hindering growth. Additionally, the assumption of Bitcoin’s first-mover advantages being sustainable is debatable, with uncertainties surrounding its scarcity and real-world utility.

While Bitcoin treasury purchases have driven short-term success, companies are vulnerable to steep bear markets, which could force liquidation at a loss. This investment trend may not address the growth needs of businesses, highlighting potential risks for companies adopting the Bitcoin treasury strategy. Public companies like Strategy may see inflated stock prices but face risks during market downturns.

Investors should carefully consider the risks associated with investing in companies like Strategy that have adopted the Bitcoin treasury strategy. While this trend may be popular now, it may not offer sustainable solutions for long-term growth. The Motley Fool Stock Advisor team has identified other promising stocks for investors to consider, with the potential for significant returns in the future.

Read more at Nasdaq: Prediction: Wall Street’s Hottest New Trend — the Bitcoin Treasury Strategy — Will Be a Spectacular Failure