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isn't TWENTY ONE just converting US government debt into Bitcoin?
794 sats \ 8 comments \ @Tehila 19h bitcoin
Tether issues bank-free "dollars" around the world, with no interest paid to the consumer. Tether backs it with US debt, and the yield is Tethers profit. With basically no expenses, they spend it on Bitcoin via Twenty One.
If the bond market is the biggest market in the world, and US debt is the biggest part of that, doesn't that mean Twenty One is accessing the largest capital pool in the world to buy Bitcoin with free money? And this is good for the US because it props up demand (reducing yield)?
Doesn't this seem like the REAL "infinite money glitch", making Strategy seem antiquated and limited?
All this depends on is demand for Tether increasing, which is inevitable when nations continue debasing their currencies?
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1144 sats \ 3 replies \ @justin_shocknet 18h
XXI is effectively owned by Tether, so it's has to be more than just copy pasta under another entity...
Microstrategy is pretty overt in that they're simply providing a wrapper for fixed income markets that need regular yield. If XXI ends up doing what tether already does maybe its a lower risk (in legacy fiat fixed income terms) than Strategy?
We don't really know exactly what "product" XXI is cooking up, all we know is that there will be some arb similar to Strategy with a Tether-esque synergy.
Maybe XXI is just a way to tap US equity markets and provides a wrapper for Tethers offshore assets in a world where offshore dollars are going to dry up? Its TradFi after all, so probably something that boring.
Important thing for individuals is that they don't touch any of this shit, and just buy coin directly... Only the fixed income funds are trapped, so let them have it. If you try to ride them like a meme stonk you're going to wish you just bought coin instead.
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10 sats \ 1 reply \ @Tehila OP 13h
If XXI ends up doing what tether already does maybe its a lower risk (in legacy fiat fixed income terms) than Strategy?
It seems there is no risk to Twenty One. Tether is a pure-profit-engine, and they are buying Bitcoin with profit, not by issuing debt like Strategy. And because Tether props up US debt, the US gov won't do anything to mess with it.
The "threat" to the model is that countries start allowing their citizens to hold and use foreign currency, have foreign bank accounts, and that the governments stop debasing their currency and start strict austerity.
Is this "boring"? Maybe? Maybe it's just a highly profitable non-US company trying to dump its cash into Bitcoin. Maybe it's no more interesting than Tesla buying Bitcoin.
But the synergy is interesting. Is it a feedback loop or a self-correction mechanism? The bigger Tether gets, the lower it drives bonds yields; lower bond yields lead to risk-on investing and lower government interest expense, both inflationary. Lower bond yields reduce profit for Tether. Twenty One gains investors in the risk-on environment. Then does Bitcoin price increasing in fiat terms reduce trust in government debt, driving up yield?
I agree owning your own coins is safest, but I'd like to understand the macro picture.
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36 sats \ 0 replies \ @justin_shocknet 7h
Highly profitable deserves an asterisk, they make a lot per employee and billions of dollars, but their return on equity isn't better than that of anyone else investing in treasuries... They're simply retaining the earnings in the form of Bitcoin, you could do that yourself with the yield from a moneymarket fund or any corporate that pays dividends or does buybacks.
The corporate structure introduces additional management risk beyond Bitcoin itself, plus speculative overpricing as the leverage ratio and cost isn't yet clear.
The macro is very interesting, just not the product. Monetizing treasuries with stablecoins while collateralizing Bitcoin seems to be the plan for getting the world off the broken dollar system without a humanitarian catastrophe. #897720
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17 sats \ 0 replies \ @TheBTCManual 13h
Word! Let fixed income be the bag holders and pump Bitcoin for the rest of us while taking on the risk! If it goes side ways, just means temporary cheap sats for the plebs
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22 sats \ 0 replies \ @BlokchainB 15h
@justin_shocknet putting on a master class!
From a pure value play he’s right but if you just want to own bitcoin companies in your brokerage account for the cause and the small possibility they grow faster in fiat terms than bitcoin then it doesn’t hurt to own a few shares if you got free fiat in your accounts.
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0 sats \ 0 replies \ @byzantine 13m
i've seen a lot of takes on this company and it seems to me that the most obvious and logical take is that they can take a large stack of bitcoin and sell a derivative on 2.7% of it to the public market at a huge premium.
they're not selling all of their coin and in fact, they're maintaining ultimate control of all of it, but they are selling a derivative on a very small portion of it because the market will allow it. It's just that simple.
and they market themselves on their huge stack as a way of retail mid-direction so you think you're buying a huge stack, but really you're buying a derivative of a small percentage of it
it's that simple
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0 sats \ 0 replies \ @Solomonsatoshi 12h
It all depends upon continued demand for USTs and anyone who understands the US economy is now trading at a loss for decades and cannot continue as it has done without becoming insolvent will see the problem here. Tether might prop up the USD but the USD is nevertheless facing an existential challenge as China is now the dominant global productive economy and China has built mBridge to be an alternative to the USD SWIFT protocol which has been the basis of US global financial system 'petrodollar' hegemony. Tether goes down with the USD. No wonder some are seeking to buy into Bitcoin before the USD sinks into insolvency.
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0 sats \ 0 replies \ @denlillaapan 17h
Pretty much, eh
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