Bitcoin Audible: Read_911 - "Bitcoin TreasuryCos: Lessons From The 1929 Crash" (Speculative Attack! Part III)
Host: Guy Swann
Date: October 29, 2025
Based on: Article by B Water
Episode Theme: Exploring the parallels between today’s Bitcoin treasury companies and the 1920s investment trust bubble, with insights into reflexivity, leverage, and potential systemic risks for Bitcoin and the wider financial system.
Episode Overview
In this episode, Guy Swann reads and analyzes Part III of B Water’s “Speculative Attack” series, specifically focusing on lessons from the 1929 stock market crash and their relevance to “Bitcoin Treasury Companies” — firms that are using Bitcoin as their principal treasury asset. Swann and the article draw detailed historical parallels between the investment trust mania of the 1920s and the current rise of leveraged, Bitcoin-holding public companies, questioning whether new forms of financial alchemy repeat old mistakes or represent a fundamentally new paradigm.
Key Discussion Points & Insights
1. Historical Parallels: Trust Mania and Bitcoin Treasuries
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[04:30 – 09:00] B Water’s article argues the mechanics underlying the 1920s investment trust bubble closely mirror those behind the explosion of Bitcoin treasury companies today.
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Similarities include rapid proliferation, high premiums over net asset value (NAV), use of leverage, and bubble-fueling reflexivity (where success attracts more capital, driving perceived value higher).
“Their parallels with the investment Trusts of the 1920s nonetheless reveal recurrent speculative pathologies that transcend their current scale.” — B Water [05:05]
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The 1920s trusts often sold at 2x or 3x their underlying asset value; today, Bitcoin treasuries experience similar NAV premiums amid investor euphoria.
“By the early months of 1929, [trusts] were being promoted at the rate of approximately one each business day…” — B Water quoting Galbraith [15:10]
2. Dismissal of Surface Differences
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[09:00 – 12:00] Swann and B Water caution against focusing solely on regulatory or structural distinctions (e.g., disclosures, transparency, management fees).
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The deeper “reflexive” financial logic and human tendencies recur despite surface improvements.
“Structural differences are taken as proof of safety when in fact they are often overstated, misleading, or fundamentally irrelevant in practice.” — B Water [10:33]
3. Mechanics of a Reflexive Bubble
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[15:00 – 25:00] Both the 1920s and current era feature:
- NAV premiums monetized by promoters and insiders
- Use of new financial instruments to amplify exposure (convertible bonds, warrants)
- Feedback loops where price appreciation funds further speculative expansion
- Risks that sound in theory — such as “intelligent long-term leverage” — become dangerous when adopted en masse.
“Both feature massive MNAV premiums, accretion magic, and reflexive feedback loops where purchases drive up the underlying asset prices, increasing their own value and borrowing power.” — B Water [12:34]
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Golden Age of Grift: Periods of rapid innovation quickly shift to exploitation, as promoters extract value up front and from recurring fees, leaving public buyers exposed.
“The big bull market covered a multitude of sins. It was a golden day for the promoter, and his name was legion.” — B Water, quoting Allen [24:57]
4. Modern "Financial Alchemy" — MicroStrategy’s Example
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[27:00 – 32:00] MicroStrategy’s CEO, Michael Saylor, explains operational flexibility compared to closed-end funds (like GBTC), but B Water points out even 1920s trusts leveraged similar “corporate stack” tools and this flexibility brought risks.
“The investment trust had evolved into something far more sophisticated than a simple pooled investment vehicle … exactly the type about which Saylor boasts today.” — B Water [29:15]
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Tools such as long-duration corporate bonds provide apparent safety, but encourage larger, systemic bets with hidden risks.
5. Systemic Risk and Reflexivity
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[35:00 – 45:00] “Safer” leverage options, like long-term corporate debt, do not eliminate systemic risk when used at scale. Instead, they can amplify market imbalances.
“Like cheap hurricane insurance after a series of quiet storm seasons that spurs a building boom, the apparent safety of termed out debt in a bull market may encourage more leverage, creating larger positions in asset inflation…” — B Water [40:47]
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When too many companies rely on continued appreciation and investor enthusiasm (rather than cash flows) to pay obligations, they teeter on pyramid-like dynamics vulnerable to market reversals.
“Because Bitcoin treasury companies currently have no cash flow, they tend to follow a similar playbook in that they raise money from investors to pay their obligations.” — B Water [49:00]
6. Fragility and the Inevitable Downturn
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[50:00 – 1:03:00] Drawing on Galbraith, Allen, and the mechanics of the 1929 crash, the article warns that when reflexivity reverses, leveraged structures collapse quickly and brutally — common equity can be wiped out even with “safe” long-term debt.
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The same investor logic that fueled runaway growth becomes a catalyst for rapid collapse.
“If Bitcoin falls substantially ... and the Treasuries trade at discounts to NAV for a prolonged period of time, the common equity could be wiped out just as it was for the Trust shares of 1929, despite their safe termed out leverage.” — B Water [1:01:12]
7. The Role of Monetary Policy and Macro Backdrop
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[1:05:00 – 1:11:00 | Guy’s Analysis]
- Swann discusses how much of the 1920s boom was driven by unprecedented debt expansion following Federal Reserve creation, driving debt-to-GDP from ~100% to over 350%.
- He distinguishes the financial panic from the subsequent Great Depression, arguing much of the latter was due to misguided government intervention that prolonged pain, not the crash itself.
“No market will naturally stay destroyed for ten years, for a decade. That is suppression of prices, that is subsidizing of bad debt…” — Guy Swann [1:09:40]
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On Bitcoin, Swann suggests that while excessive leverage and speculative structures inevitably unwind, Bitcoin’s rapid price discovery and unwinding process — unlike fiat — clear out the deadweight quickly, as seen in past crypto blow-ups (Mt. Gox, FTX, etc).
“Bitcoin aggressively and painfully reveals to us all of the bullshit very, very quickly.” — Guy Swann [1:14:03]
8. Is This Really a Self-Fueling Bubble?
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[1:12:00 – 1:18:00] Swann shares his skepticism that Bitcoin treasury companies alone are driving the current cycle; NAV premiums have declined, and many such companies’ stock prices have faltered or moved sideways despite Bitcoin appreciation.
“It feels like it's running itself out of steam all by itself. Unless we literally get an underlying bubble, like a hype cycle, very aggressive in bitcoin … I don't think these types of structures could ... cause their own sorts of problems and lead to the kind of leverage that will unravel…” — Guy Swann [1:13:43]
9. The Broader Implications — Escape from Fiat?
- [Concluding 1:20:00+] B Water’s piece closes by suggesting the financial alchemy of Bitcoin treasuries could expand to other arenas (e.g., gold-backed treasury companies), potentially contributing to a larger “flight into real values” and challenging the current fiat-dominated order — but also risking an “inflation supercycle” as credit chases scarce assets outside the traditional system.
Notable Quotes & Memorable Moments
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On Human Nature and Speculation:
"The remarkable fact is not that such differences exist between bitcoin treasuries and 1920s trusts, but that the same fundamental dynamics repeatedly emerge regardless, making the deeper parallels between them impossible to ignore."
— B Water [12:00] -
On Reflexivity and Fragility:
"Reflexivity is a two way street. The crash wasn't merely a price event. As the reflexive loop reversed, the same dynamics that drove the boom amplified the bust both in the asset markets and the real economy."
— B Water [58:40] -
On Distinguishing This Cycle from the Past:
"It seems unlikely. It seems like these things are getting priced out pretty quickly. And especially with the fervor for bitcoin treasury companies that has been earlier this year... they adopted this strategy and it didn't really do anything."
— Guy Swann [1:15:31]
Timestamps for Important Segments
- [04:30] — Opening remarks and orientation to the article’s focus
- [09:00] — Parallels between Bitcoin treasuries and the 1920s trusts
- [15:10] — Historical stats: proliferation of investment trusts in 1928–29
- [24:57] — The “Golden Age of Grift” and incentives for promoters
- [27:00] — MicroStrategy and the allure/danger of financial alchemy
- [40:47] — Systemic risk in “safe” leverage configurations
- [49:00] — Pyramid-like mechanics in Bitcoin treasuries due to lack of cash flow
- [58:40] — The rapid reversal of leveraged structures in a bust
- [1:09:40] — Great Depression: Market failure or policy error?
- [1:13:43] — Swann’s skepticism on self-sustaining bubble risk
- [1:20:00+] — Macro systemic threat: flight from fiat and future directions
Conclusion & Takeaways
- The speculative logic underpinning today’s Bitcoin treasury companies echoes not just the structure but the psychology and reflexivity of historic financial bubbles like the 1920s trust mania.
- Surface-level differences (transparency, regulation) may mitigate specific risks but do not prevent the deeper dynamics that make leverage-driven bubbles dangerous at scale.
- Bitcoin treasuries’ reliance on NAV accretion, continuous investor enthusiasm, and leverage creates the possibility of pyramid-like fragility.
- While parallels abound, Swann is not convinced current Bitcoin treasury exuberance is itself driving a self-fueling bubble — and sees Bitcoin’s inherent market mechanisms as more “honest” in rapidly liquidating bad bets compared to fiat’s papering over of failures.
- The broader significance may be as a symptom of deep economic malaise — “multiflation” — and a sign of the accelerating flight into real assets as faith in fiat erodes.
Recommended for:
- Investors wanting a historical context for Bitcoin’s latest financial innovations
- Anyone curious about the risks (and limits) of leveraged Bitcoin treasuries
- Listeners interested in the interplay between new technology, old financial pathologies, and macroeconomic reality
Links to Further Reading:
Next Episode Preview:
Guy Swann promises an engaging discussion with Alex Svetsky on “The Bushido of Bitcoin and Fatherhood.”
Host’s Sign-off:
“I am Guy Swan, this is Bitcoin Audible, and until next time, everybody — that's my two sats.” [End]