Sequans has finished unwinding its bitcoin treasury, selling the remaining 314 bitcoin it held at the end of June. The semiconductor company had already redeemed its convertible debt in May and now says its attention is entirely back on its operating business. A treasury that once held more than 3,200 bitcoin is down to zero.
Bitcoin treasury companies can give shareholders leveraged exposure to bitcoin, and that leverage works in both directions. Debt, operating expenses and changes in the premium investors will pay for the stock can amplify the underlying asset’s moves. A roughly 50% bitcoin drawdown is painful for someone holding coins outright. Inside a company with financing obligations and an operating business to support, it can force decisions that have nothing to do with the long-term thesis.
Sequans is not alone in pulling back. Other companies have exited or reduced their holdings for debt repayment, working capital and changes in strategy. Sequans describes its own exit as a deliberate strengthening of the balance sheet, and its unwind began well before this week. Still, the timing of the completed exit is hard to ignore. Bitcoin has recovered substantially from its lows, and to me it increasingly looks like the bottom may be behind us. That is a frustrating point to finish leaving a strategy built around its long-term appreciation.
You can be right about bitcoin and still build a structure that cannot comfortably hold it through a drawdown. The thesis needs time. The balance sheet has to give you that time.
Happy Friday.