Duke Waldrop on BMTV: Asia’s Bitcoin Treasury Playbook

Well, Bitcoin has been testing investors' nerves recently, falling to $79K this week, and its lowest level in over a month, and this week, both the Fed and the Bank of Japan make rate decisions. Meanwhile, Metaplanet, Japan's biggest Bitcoin Treasury company, is trading below the value of its own Bitcoin, and faces possible removal from MSCI's global indexes. Here to make sense of it all for us, it's our own Duke Waldrop, head of Asia Markets at UTXO Management. Great to have you in studio with us.

Happy to be here.

Yeah. Well, let's start by rewinding a little bit back to Hong Kong in August, because you talked on a panel evolution of Bitcoin institutions there. Can you tell us what were some of the conversations you were having with investors that we never really got to hear on stage?

Yeah, it was a great conference. It was the first time that I kind of got to see the Bitcoin mindset of the Asian investor really adopt and continue to improve. As many people know, Asia has been a long-term bidder of Bitcoin, so now, as we've seen these Treasury companies come through, there's been an evolution and a new education these Asian investors have had to learn. I'm seeing it firsthand. It's really interesting to see that these complex investors are coming back year after year with new ideas, new strategies, and there's a lot of stuff happening in the back room that I'm excited about.

Duke, Bitcoin fell to about 79 and some change on Saturday? Its lowest level in more than a month. This week, the Fed decides on rates Wednesday. Bank of Japan decides on Friday. What are you expecting from both of these decisions this week? In particular, the Bank of Japan. How would that impact the treasury landscape in Asia?

Yeah, I think the real way to answer that is it's more sort of speed of the repricing that's going to cause an impact. This yen carry trade has been going on for 20 plus years now. A lot of these macro fund investors have yen-denominated liabilities and overnight, they're having to fire sale and get rid of as much as they can as fast as they can, and that's where Bitcoin comes into play. It's 24/7 incredibly liquid market. When you're a forced seller, you have to go find liquidity wherever. Bitcoin could see a little bit of liquidity shock, short-term, but doesn't change the overall thesis on Bitcoin at all.

Some folks are saying that Bank of Japan might actually wait and just stay neutral for the meantime, but let's say they give us a surprise on Friday. Who in Asia, you talk about having to engage in a fire sale? Who's going to feel it first? Is it going to be leverage traders? Is it going to be these trading desks? Is it going to be Treasury companies? Who's going to really feel that pain first?

Yeah, I think it's more so the fund managers that were overlevered. Like I said, this has been a trade that's been going on for a long time, and you can't unwind these massive billion dollar positions overnight. Like I said, they're going to become forced sellers, and I think it's going to be the portfolio managers, anyone that has liquidity with the yen-denominated liabilities on their book, they have to sell, and they're going to have to do it soon.

Let's talk about Metaplanet a little bit. Super League shareholders just approved the deal with Metaplanet. They are expanding to the US with SLE or SUPA. What does that mean for them? What does the strategy do that they couldn't otherwise do just in Tokyo?

Yeah, it's really smart. The Metaplanet executive team is executing at a really high level right now, and I think their move to Superplanet was really them trying to go get another liquidity pool, and they're very smart. They have the Tokyo Stock Exchange. They've got a lot of liquidity on it, but they need to go get another pool, and the Nasdaq was the first route that they saw. Again, I think the execution from that team is why you're betting on Metaplanet. Like you said, they're trading at a discount to their Bitcoin value, but you're betting on the expertise and the local expertise of that team in Tokyo.

Well, why is the market valuing it before the value of or below its own Bitcoin right now?

Yeah, it's a good question. I think one of the things that traditional investors look at is the underlying economics of a stock when they're trading it, and they don't really realize that this is more of a Bitcoin investment than it is a traditional stock or equity. There's different underlying mechanics that you have to look at. For us at UTXO, one of the main cardinal things that we follow is are you increasing your Bitcoin per share? A lot of these other traditional investors, they don't have that mindset, they don't have that knowledge of that's the real metric that we're gauging success on as Bitcoin investors. I think that at the end of the day, if you're doing everything you can to continue increasing your Bitcoin per share, it's a great bet.

Earlier in the segment, you mentioned that mind frame switch that you're seeing with the Asian companies, investors, kind of the Bitcoin ecosystem, more broadly. What about that marketplace needs to shift, for us to see prefs in those markets, right? You see companies like Metaplanet launching a pref here in the US, presumably because there was less friction than launching one in their own jurisdiction.

Yeah, it's a good question. Prefs in Asia are something that we haven't spent a ton of time on, more so, because we haven't really seen an interest from some of these treasury companies. They're looking at other creative capital raising methods, and I think that in the day, that's what preferreds, that's what they offer is another way to raise capital. Definitely, the East is way behind. I've talked to multiple people in investment banks there, and when you mentioned STRC or any of the preferreds, they're like, what the heck are you talking about? I think us in the US were way ahead in the preferreds market. I think Asia might catch up, but they're definitely behind us right now.

When you talk about accessing capital and liquidity pools, MSCI comes top of mind. They're going to flag their list of non-operating companies on November 11th. Metaplanet was one of those flagged in its test run, given that they could be dropped from these indices as soon as November 30th. What actually changes for Metaplanet? Does this fundamentally change anything? We see them potentially being dropped at the same time as they're chasing additional liquidity pools?

I don't think so. I think this is just a broad overreach because the global markets have seen the return that these Bitcoin treasuries have made. There's a lot of, they're trying to figure out how they can silence a lot of these. One thing, speaking to my expertise in Hong Kong, you cannot run the traditional flywheel [unclear: digital asset treasury]. You just can't. They won't let you do it. You have to have an operating business that is cash flowing. That excess cash, you're welcome to put into Bitcoin, but it's a different model than the first phase one you can call out of these Bitcoin treasury companies that just ran the Michael Saylor flywheel strategy. Once the market turned, a lot of them got caught on the wrong side of things. I think that's the benefit that Asia has is they're very concerned on the overall underlying operating business of the company.

I think that it might make things not grow as fast, but I think the stability of it in the long-term security of it is a lot better.

Can you talk a little bit more about Hong Kong and its exchange’s decision on these companies that buy and sell Bitcoin? They say they're unsuitable for listing, could be suspended. What are these companies doing in response?

Yeah, to be honest, a lot of them are pivoting. The ones that are true Bitcoiners are staying with the course, but the regulators there, yeah, like I said, the traditional flywheel model of the Bitcoin treasury companies. They're not letting you run. There were several companies during that era that they purchased shell companies and they wanted to run this whole plan and now they're stuck and having to pivot to AI or anything else that they can do. It's a bit of recovery, but one of our portfolio companies, Moon Inc., one of the things that we did was we started creating Bitcoin products and actually generating revenue from our Bitcoin products. That was one thing that the regulators absolutely loved because they have no issue with us buying Bitcoin if our business is creating revenue around a Bitcoin product. That's one of the difficulties of Hong Kong, but having said that, if you're one of the first players there and you're following the rules and you're on good terms with the regulators, you have a really good chance to succeed.

Yeah, I was about to ask for some examples, what differentiates a company in, you know, good standing versus one that's not. Is there a point where their Bitcoin position can get too big to be a problem?

Yeah, there's a fixed amount of your balance sheet that you're allowed to put into Bitcoin. If you surpass that, they'll send you a bunch of notices, you have to either sell it or if you don't, they have the ability to delist you. So they're very strict. The Hong Kong Stock Exchange has a long history of valuing the retail investor, the smaller guy, which I think is very, very important. But with that, there's a lot more red tape and kind of fine lines that you have to be careful about.

We've talked about Hong Kong. We've talked about Japan, you know, you're focused on this entire region. There's a lot of these treasury companies and other Bitcoin aligned business models popping up in all sorts of different jurisdictions throughout Asia. What are you most excited about in Asia outside of Hong Kong and Japan? Is there any particular market that we should be turning our eyes toward?

Yeah, really excited on Thailand. I think there's a lot of cool things coming out of Thailand. The team there, we have an investment in a team there, Astra, and they’re a Bitcoin treasury company. But with a spin on it, their emphasis is they are going to acquire cash flow positive businesses and kind of vertically integrate as much as possible with all services and have a more sturdy cash supply that does fund the Bitcoin purchases. But it's not the entire reason to buy the stock that we're just going to go stack Bitcoin. We're actually going to buy revenue generating businesses and with that excess cash, we'll flow it into Bitcoin. And I think that's a stronger model that has a lot better staying power than some of these other models. So I'm really interested in Thailand. Pay attention. There's a lot of things I can't talk about that's coming from Thailand, but it's going to be good.

Okay, love the tease there. I think you briefly mentioned this, but when you look at a company, a US company like Strive, they have SATA and [unclear]. Who in the Asia markets could maybe get involved with products like that?

It's a good question. I mean, I think some of the larger treasury companies definitely have have it as an option. Again, I think what's interesting about the Asia capital markets is there's a lot of unique and creative ways to fundraise. And I think that might be one of the reasons why prefs have taken off so well here is because at a certain point, there's only so many ways you can raise money. And the Asian investors have many other avenues that I think they'll explore before they go for the prefs.

And along that line, Fidelity just called perpetual preferreds the newest demand catalyst for Bitcoin. Could, I mean, could that take off in Asian markets?

It's not bearish. That's for sure. I mean, they know that name. So I think for sure, it's something like I said, I think they're behind, but to say that they're not going to show up to the party with prefs is probably not true. I think they will at some point, but it's just not on the forefront right now.

And your fund, you know, you mentioned the investment in Thailand. Y'all were also very early to Metaplanet from the dawn of the Metaplanet story. Now we're seeing, you know, capital giants, like Capital Group, for example, they just increased their share of voting shares to 11% of the total cap table. So what is a traditional fund manager like someone at Capital Group truly betting on when they go in that large on a Bitcoin treasury stock in Asia?

Yeah, I think there's a couple of ways to read that headline. They're obviously a huge firm, but you know, they have, I think, [unclear amount] trillion dollars of assets under management, something like that. So when you read that headline, there's a little bit more underlying to it, right? You have to think that these are investment managers, right? They're not taking a sole position themselves in Metaplanet. They have people that have given them money that are asking for allocation to Metaplanet, because they are portfolio managers. They have mutual funds. They have tons of different funds within their firm that they have clients that are now asking about Metaplanet, and they want allocation to Metaplanet. And those portfolio managers have to go get it. So I think it's more so a signal of the retail sentiment, really like banging the horn that they want Metaplanet. And these fund managers that were writing off Metaplanet over the past few years, now they have no option because their clients are demanding that they get access to it. So I think it's bullish as far as, I think, there's going to be more retail demand that comes through this position. It's not just Capital Group taking a large position, in my opinion.

Before we let you go, Bitcoin inching back up toward $80K this morning, do you have a price path for the rest of 2026 and into 27?

I mean, I don't. I think prices are pretty arbitrary to be honest with you. What I am watching is I really kind of want to see when this AI and semi trade cools off and stops. We've seen a lot of volatility in the past few months on it. So I think the music could already be stopping, but I think that'll kind of signal to investors that the risk on, risk off appetite is changed. So I think, once we see that true rotation from the AI and semis, there could be a change in volatility, one way or the other with Bitcoin, but that's really what I'm watching.

You can't give us like a ballpark?

No.

Just for funsies.

The moon, a million.

There we go. All right, awesome. Duke Waldrop of UTXO, Thank you so much for joining us on the desk today.

Thank you guys.