Bitcoin Audible – Episode Read_910

Bitcoin Treasury Cos & The Roaring 20s: Speculative Attack! Part II
Host: Guy Swann
Date: October 28, 2025

Episode Overview

In this episode, Guy Swann continues his deep dive into the mechanics of speculative attacks, making direct comparisons between today’s Bitcoin Treasury companies and the investment trust mania of the 1920s. The reading, based on the article by B Water, explores parallels between leveraged financial instruments of the past and the new wave of Bitcoin financialization seen in entities like MicroStrategy and Grayscale. Guy supplements the narrative with his own insights, contextualizing how present-day Bitcoin dynamics fit within historical financial cycles and highlighting the risks, opportunities, and potential outcomes for both investors and the broader market.

Key Discussion Points and Insights

1. Investment Trusts of the 1920s and Bitcoin Treasury Companies

• Historical Parallels

  • In the 1920s, investment trusts acted as leveraged vehicles to provide access to scarce assets (namely stocks), trading at significant premiums to their net asset value (NAV).
  • The creation and layering (or pyramiding) of trusts led to a feedback loop, amplifying both gains and risks—eventually fueling the 1929 crash.
  • Modern Bitcoin Treasury companies, such as MicroStrategy, operate on similar reflexive dynamics, with an MNAV (Market Value over Net Asset Value) premium often accruing from limited access to Bitcoin in traditional markets.

• Quote

  “…comparing them [Goldman Sachs Trading Corporation] to the MicroStrategy of their time because they had the biggest premium and they were basically the pioneer of this entire investment trust era.”
  — Co-host (02:30)

Timestamp: 04:01–09:52

• Michael Saylor and MicroStrategy are weaponizing Wall Street financial engineering to invert traditional risk models, fueling a current “treasury craze.”
• Grayscale’s Bitcoin Trust (GBTC) preceded the Bitcoin Treasury boom, offering exposure to Bitcoin for those unable or unwilling to deal with self-custody or regulatory hurdles.
• The GBTC premium (at times 2x Bitcoin’s price) created arbitrage opportunities and risk, with leverage from funds like Three Arrows Capital exacerbating exposure and leading to collapse when MNAV premiums evaporated.

2. The Leverage Feedback Loop and Structural Fragility

• GBTC and Gold Trusts as Precedents

  • GBTC’s trajectory demonstrated how even unleveraged vehicles can seed systemic risk when surrounding financial actors employ leverage.
  • Historical gold trusts like Central Fund of Canada operated similarly—offering exposure, creating persistent NAV premiums, and eventually succumbing to competitive efficiency (ETFs in 2004 for gold, Bitcoin ETFs in 2024).
  • Each cycle sees structures emerge to democratize access—but these, too, become vulnerable to the same feedback-dominated busts as direct leverage.

• Quote

  “A major difference between modern mutual funds and these trusts was that the trusts were leveraged. Like Bitcoin Treasuries, they invested using borrowed money that was considered Safe…”
  — Guy Swann (10:54)

Timestamp: 09:52–22:11

• In the 1920s, investment trusts enabled ordinary investors to access the stock market, similar to how Bitcoin Treasury companies grant access to Bitcoin exposure via traditional markets.
• Both old and new vehicles rely on customer trust in management expertise—“investors are also buying into the perceived expertise of leaders like Michael Saylor…” (14:46).
• The persistent premium was construed as a form of perpetual motion for value creation—a dangerous illusion.

3. Pyramiding and ‘Perpetual Motion’ in Financial Innovation

• Pyramiding Structures

  • Goldman Sachs’ investment trust era included layers of funds holding each other’s shares, compounding premiums and leverage to unsustainable heights.
  • Example: The Goldman Sachs Trading Corporation held Shenandoah Corporation, which held Blue Ridge Corporation, with each trading at a premium to the others—“a premium to a premium to a premium to net asset value.” (22:12)

• Quote

  “If there must be madness, something may be said for having it on a heroic scale.”
  — Galbraith, quoted by Guy Swann (23:35, 51:21)

Timestamp: 22:11–26:39

• This pyramiding created a speculative chain reaction, and the article suggests the possibility of future Bitcoin treasuries investing in each other, fueling yet another feedback loop.

4. Modern Bitcoin Financialization and Systemic Risk

• GBTC’s Legacy and Bitcoin Treasury Company Dynamics

  • GBTC’s MNAV premium stemmed from capital unable to access Bitcoin directly, creating conditions where arbitrage, leverage, and eventual collapse were inevitable once ETFs arrived.
  • Bitcoin Treasury companies like MicroStrategy leverage fiat debt to acquire Bitcoin, banking on Bitcoin’s price appreciation outstripping interest and principal costs—a high-stakes “short position” on the dollar.
  • These structures, when multiplied across the system, risk creating a new feedback-driven financial bubble.

• Quote

  “This is a debt, this is a perpetual, perpetual value machine where we can just grow indefinitely through the creation of more debt. That it should be obvious that that’s not possible.”
  — Guy Swann (32:12)

Timestamp: 26:39–37:52

• The rise and fall of these structures is contingent on how quickly access to Bitcoin broadens in traditional finance, which will naturally erode premium opportunities.
• “Bitcoin treasury companies specifically have a use entirely in the context of accessing latent capital that doesn’t have access to bitcoin. The second it kind of becomes normalized... all blows up, or at least any idea of a premium...” (37:52)

5. Reflections on Cycles, Speculation, and Market Psychology

• Market Adoption and Emotional Cycles

  • Guy uses the “weird dancer at the concert” metaphor, suggesting we’re still early in the network effect, not yet at the euphoria typical of a bubble top.
  • As access, normalization, and momentum build, a future bubble and crash cycle seems “inevitable”—not because of Bitcoin, but due to human nature and market structure.

• Quote

  “When that happens, we will see all of this stuff go bonkers like Bitcoin treasury companies, premiums, you name it.”
  — Guy Swann (43:48)

Timestamp: 37:52–51:32

• The next phase might be different (“bigger and slower”) due to increased awareness of past cycles and more sophisticated participants—“I think it makes a lot of sense that the next one literally doesn’t happen like the previous ones…” (43:08)

6. The Ultimate Bet: MicroStrategy and the Dollar Short

• MicroStrategy as a Public, Conscious Bet
  • Unlike the 1920s trusts which sought to amplify stock returns, MicroStrategy is openly borrowing fiat to short the dollar and go long on Bitcoin—betting the eventual demonetization of USD and monetization of BTC.
  • The ability to withstand volatility and manage leverage is crucial: “Leverage always means every time you have leverage, you get outsized gains. But it means also that you have outsized losses.” (48:45)

Notable Quotes & Moments

• On the Roaring 20s Pyramid

  “At the top of the pyramid, the Goldman Sachs Trading Corporation traded at a premium to a premium to a premium to net asset value.”
  — Guy Swann reading B Water (22:12)

• On Inevitable Bubbles

  “I kind of feel like that’s inevitable. It’s just the nature of markets, especially one that’s shifting so much so quickly, like bitcoin.”
  — Guy Swann (48:47)

• On Heroic Scale of Madness

  “It was difficult not to marvel at the imagination implicit in this gigantic insanity. If there must be madness, something may be said for having it on a heroic scale.”
  — Quoting Galbraith (51:21–51:32)

• On MicroStrategy’s Bet

  “He’s openly borrowing to short the dollar. Now that certainly doesn’t mean you can’t leverage can’t still destroy you. It’s literally all about the time frame and how leveraged you are and what kind of a swing…”
  — Guy Swann (45:53)

Important Timestamps

• 00:00–03:46 — Introduction and historic context: 1929 trusts, reference to Goldman Sachs Trading Corporation, setting up the episode’s theme.
• 04:01–09:52 — Reading: The birth of Bitcoin Treasury companies, Grayscale and gold trusts, the mechanics of premiums and risk.
• 09:52–22:11 — Parallels drawn between 1920s investment trusts, Bitcoin wrappers, and the risk of systemic leverage.
• 22:11–26:39 — Discussion of trust pyramiding, MNAV premium feedback loops, and present-day analogues.
• 26:39–37:52 — Guy’s analysis: the mechanics of financialization, risk of over-leverage, and observations on the current Bitcoin market cycle.
• 37:52–43:48 — Emotional and market cycles, current state of Bitcoin adoption, speculation about future bubbles.
• 43:48–48:47 — MicroStrategy’s public bet, the risks of leverage, and the mechanics of dollar shorting via Bitcoin.
• 51:21–51:32 — “Heroic insanity” quote—the perfect summation of financial manias, past and present.

Takeaway & Tone

Guy Swann’s narration is insightful, energetic, and often humorous, emphasizing both the sophistication and folly inherent in each cycle of financial innovation. The episode is rich with historic analogy, skepticism of ‘perpetual value machines,’ and a clear-eyed realism about the risks facing modern Bitcoin financialization. Listeners gain a deep understanding of the parallels between historic market manias and today’s Bitcoin treasury phenomenon, as well as the mechanisms that drive these speculative cycles and the inevitable “boom and bust” outcomes.

Memorable Closing Quote:

“If there must be madness, something may be said for having it on a heroic scale.” (51:32)

For further reading, check out links in the show notes to B Water’s articles and resources mentioned by Guy Swann.