The Breakdown - Bitcoin Treasury Honeymoon Ends

Episode Date: December 11, 2025

Today’s episode breaks down the rough NYSE debut of 21 Capital, whose immediate drop suggests markets are no longer willing to award premiums to companies whose only model is selling shares to buy more Bitcoin. The discussion examines why treasury firms are being valued at 1x, what 21’s attempt to build real Bitcoin-based businesses signals about the future of the category, and how shifting analyst frameworks—from Standard Chartered’s recalibration to institutional-flow–driven models—reflect a maturing market that now demands execution, not narrative. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Wednesday, December 10th, and today we are talking about a new treasury company that debuted on the New York Stock Exchange, and things did not go well. Before we get into that, however, if you're enjoying the breakdown, please go subscribe to it. Give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, well, the latest Bitcoin Treasury company debuted on Tuesday, and things did not go well. 21 Capital was listed on the New York Stock Exchange after completing their SPAC merger.

The stock opened at around $11, a 25% drop from the closing price for the SPAC deal. The stock recovered slightly in the afternoon, but this was still a gut punch for what was supposed to be the next big Bitcoin Treasury company. 21 was the vehicle put together during the spring with investment from Tether, BitFinex, Cantor Fitzgerald, and SoftBank. They hired strike founder Jack Mahler's CEO and accumulated $3.9 billion in Bitcoin before going public. That was enough to make them the third largest Bitcoin treasury company behind Micro Strategy and Marathon Digital. Mollers had high hope coming into the listing. He said in a statement, Bitcoin is honest money. That's why people choose it, and that's why we built 21 on top of it. Listing on the NYSE is about giving Bitcoin the place it deserves in global markets

and giving investors the best of Bitcoin, its strength as a reserve and the upside of a business built on it. The investors were also hyping up the stock with Mitchell Eskew of Blockware tweeting, This isn't your average dat whose primary strategy is hiring a C-tier Bitcoin influencer with a few thousand followers to bullpost 24-7. The groups backing 21 are connected with the most powerful institutions in the world. 21 will be a major player not only in Bitcoin but in the grand arc of financial history. Nobody is bullish enough. The immediate crash, however, forces perhaps some reassessment. Normally Bitcoin Treasury companies get at least a short period of grace from the market on launch? It's reasonable for even a cynical trader to price in some additional

Bitcoin accumulation out at the gate and attach a slight premium to the stock. Instead, 21 is priced basically in line with the value of their treasury. The market is signaling that they're not willing to fund the purchase of a single Satoshi out of share sales. And I certainly think this is a lot less about 21 than it is about the category. Even with Bitcoin jumping 3% to reach 92,000, that tailwind didn't help 21 at all. Still, 21 could mark a turning point for the business model of Bitcoin Treasury companies? Until now, these companies haven't really done much beyond selling stock and buying Bitcoin, and while that business model can enjoy a premium while growth is strong, once the valuation multiple hits 1x, it's basically all over. They have no appreciable revenue,

so there's no way to recover. Micro Strategy is the possible exception, having better access to debt capital due to their size. But even they are struggling to fight the gravity in markets that wants to price these companies at 1x. Some analysts even argue that Bitcoin Treasury companies should be priced at a discount, like closed-end funds. 21 is aiming to do a little more than just buy Bitcoin. They want to leverage their industry connections to build a Bitcoin-based business around brokerage, credit, and lending. Earlier in the week, Mauler said, We look at a Coinbase and don't think they're a Bitcoin business. They're a crypto business. We look at strategy that's focused on Bitcoin but doesn't have products or cash flow in the industry.

We want to live in the intersection of that. During an appearance on CNBC on Monday, the anchor asked why an investor shouldn't just buy Bitcoin instead. Mollers responded, Bitcoin doesn't have Tether, softbank, and the cash flows will produce. We do not want the market to think of us and price us as just a treasury asset. That's not us at all. We're going to accumulate as much Bitcoin as we possibly can, but we also want to build massive businesses. I think the markets will appreciate that tether's no slouch at that.

Honestly, with this back, it feels like whatever the previous honeymoon cycle was for Bitcoin Treasury companies is over. At least at the moment, there is no premium left for merely being a Bitcoin vehicle. The markets want to see a demonstrated ability to grow the balance sheet based on something other than just financial engineering. Now, 21 then, could be an interesting experiment in this direction with their attempt to build a financial services company around a Bitcoin core, but markets aren't really giving them the benefit of the doubt.

It's pretty clear that at this stage, based on where markets are generally, investors are going to need to see execution, not just narrative, before they give Bitcoin Treasury companies another chance. Relatedly, time to pour one out for the bull market as Standard Chartered officially trims their end-of-year price target. Throughout the year, Standard Charter stood out as the most bullish research shop in the financial industry. Despite being a 150-year-old investment bank, head of digital assets research, Jeffrey Kendrick,

has delivered eye-popping price targets going toe to toe to toe with Kathy Wood. What's more, Kendrick managed to contextualize the ups and downs of the news cycle each week, while remaining fixed to a sky-high long-term target. If something good happened, Bitcoin was going to $200,000 by the end of the year. If Bitcoin was crashing, don't worry, it's still going to end up at $200,000. Now, with three weeks left in 25, it's time to throw in the towel. Kendrick wrote on Tuesday that Bitcoin's performance had, quote, forced us to recalibrate. The new end of your target is 100,000, with Kendrick acknowledging, our previous near-term targets are wrong.

Still, you can't keep a good bull down and Kendrick is standing by the call of $500,000 Bitcoin by 2030. That timeline has been pushed out from 2008 in previous reports, but Kendrick is still predicting a prolonged bull market that sees Bitcoin hitting higher highs every year for the remainder of the decade. Legacy internet and infrastructure are brittle, plagued by downtime, coverage gaps, and outdated financing models. Communities and builders are left behind while capital sits locked down. out. Althea is changing that. Since 2018, their technology has powered resilient, sustainable networks across the U.S. and abroad. With Althea L1, they built the world's first blockchain purpose-built for utilities and telecom, turning infrastructure into a transparent, investable asset class. Through liquid infrastructure, networks can now be financed in real time, operated more efficiently

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well above their average cost of 74,000. However, his new framework, with an elongated path to half a million, assumes zero debt buying. Kendrick also explained that it's not a crypto winter just a cold breeze. Crypto winters are a thing of the past. He continued, with the advent of ETF buying, we think the Bitcoin halving cycle is no longer a relevant price driver. Longer-term ETF buyers are a much more important price driver. Now, the thesis that cycles are over also implies that we won't see another parabolic run in Bitcoin. In Kendrick's view, the speculative retail buyers and leveraged crypto funds that drove previous cycles will never return. Instead, the driver for Bitcoin's price appreciation will simply be the slow methodical accumulation from institutions. He noted that

over the past two years, the ETF saw three big spikes in inflows that each correlated to start of quarter allocation windows. The October all-time high didn't line up with that timing, but it also didn't feature a big batch of ETF inflows. Kendrick's thesis is that institutions will keep adding Bitcoin to roughly double their current portfolio weight based on volatility adjusted returns. It's not the glamorous parabolic path he once predicted, but standard chartered's base case still implies a 35% compound annual growth rate. Realistically, this is what many expected as institutions came into the space. Decent price appreciation, but also an end to the wild volatility that defined Bitcoin's early days. Earlier this week, in an interview on Fox business,

Kathy Wood said, I think there's a fear of the four-year cycle, but we think the move of institutions into this new asset class will prevent much more of a decline. We may have seen the low a couple of weeks ago. In other words, Standard Chartered and Kathy Wood remained bullish, but there are far fewer hyper-bullish calls as Bitcoin matures. Switching to the regulatory side of the house, which has been the big theme this week, SEC Chair Paul Atkins still has a few things planned. Speaking about his crypto priorities for next year, he said, you ain't seen nothing yet. Atkins spoke at the Blockchain Association's Washington event on Tuesday to give a status update for his agency. This year, we've seen the SEC layout some very comprehensive plans and a coherent vision,

but there's been relatively little action. The agency largely spent the year unwinding enforcement matters left over from the Gensler era. That won't be the case next year without Atkins commenting, all the seeds that we've planted will be able to start seeding and sprouting, then we'll be able to harvest the fruit. The two big proposals that Atkins has in the works are an innovation exemption and a token taxonomy. The innovation exemption is aimed at giving crypto companies and Tradfive firms a clear path to launch crypto products that wouldn't meet the standard SEC rules. As one example, it's widely expected that asset tokenization products and regulatory approval for on-chain trading will start arriving next year. The core idea for

the innovation exemption is that Atkins wants a checklist of requirements that firms can meet, rather than granting no action letters on an ad hoc basis. That way, the products can come to market with greater velocity and a relatively level playing field. Atkins is hoping for a brisk timeline for this proposal, stating that he hopes to have the policy put forward by the end of January. The token taxonomy idea has been less discussed, but could end up having some big implications. The core idea is to lay out a set of guidelines to define which tokens are securities and which are non-securities, a process that, of course, Gary Gensler repeatedly refused to embark upon. Gensler's view was basically every token as a security, and Congress would need to pass legislation to change that.

Atkins is also of the view that Congress needs to get the market structure bill done before he can lay out a full token framework, noting that the goal of getting the bill done by the end of the year relates to, quote, what Congress comes up with by then. One thing to watch will be how far Atkins is willing to go without the market structure bill in hand. Theoretically, the SEC can get quite a bit done under their existing powers. Atkins recapped the basic contours of his token taxonomy idea, explaining four major categories of tokens. tokenized securities, network tokens, digital collectibles, and digital tools. He then commented that tokenized securities is the only area the SEC should regulate, adding, ICOs transcend all four topics. Three of those areas are on the CFTC side, so we'll let

them worry about that, and will focus on tokenized securities. Many are reading this as tacit approval for a wide range of ICOs and could explain why Coinbase was confident to host the Monad ICO last month. Monad is a network token, so according to Atkins, it doesn't fall within the SEC's jurisdiction. Also appearing at the Blockchain Association event, Senator Cynthia Lummis and Kirsten Gillibrand gave a bipartisan update on the market structure bill. Lummus acknowledged that the industry was getting a little concerned, but assured the crowd that drafts were changing every few days. She commented,

Our staffs are exhausted. I think that we're to the point where it's better to go ahead with the product and market up next week and then give everybody a break over the Christmas break to catch their breath. Making a firm commitment, she added, My goal is to share a draft at the end of this week that is our best efforts to date and let the industry vet it. Let Republicans and Democrats vet it and then go to markup next week. Gillibrand also suggested that some of the biggest problems have been resolved. The first big bipartisan

meeting on the bill was held this week, and Gillibrand reported that it went well. She said nothing is holding up this bill. We delivered that set of asks to the Republicans last night, and then Cynthia and I and some others are going to meet today, go through some of them, and I'm just very optimistic that this product is going to be so strong when we are finished, because even the House didn't tackle all the issues we are tackling in this draft. Now, that may or may not be a good sign for the industry. Jillebrand is generally a very pro-crypto lawmakers, in fact, is held down the fort for her side of the aisle at various points. But earlier in the year, she did speak out strongly against the ability to pay yield in stable coin holders, meaning that there's more questions about whether her version of a good outcome is a good

outcome for the industry. Ultimately, while Lomas is hopeful, she did frame the negotiations as still having a lot of moving parts. She said, while the Democrats and Republicans are negotiating, we're also working with the industry in the White House, so it's a little bit of three-dimensional chess. All told, though, there seemed to be a few glimmers of hope. that this bill will gain a little momentum into the end of the year. And that, friends, is going to do it for today's breakdown. Appreciate you listening, as always. And until next time, be safe and take care of each other.

Peace.