The explosion of companies created to hold crypto assets has likely reached its peak. Galaxy Digital's CEO, Mike Novogratz, warns that future success will depend on strategic positioning rather than simply accumulating assets.
Treasury bond issuance peak has passed
Speaking during Galaxy's second-quarter earnings call on Tuesday, Novogratz said the rise of crypto treasury companies has likely peaked. "We have probably gone through the peak treasury company issuance period," he said. "The question now is which of the existing companies will become the giants."
Ethereum has two large treasury companies—Tom Lee's BitMine and Joe Lubin's SharpLink—both predicted to continue growing. New entrants may "find it more challenging to seek opportunities," Novogratz warned.
Galaxy Digital partners with over 20 crypto treasury companies, earning management fees to oversee their digital assets. These partnerships have added approximately $2 billion in assets to Galaxy's platform, creating what Novogratz calls "recurring income that will continue forever."
The growth of crypto treasury companies in the US has benefited from improved legal conditions. Pioneers have pursued MicroStrategy's Bitcoin-heavy approach, while new entrants have diversified into Ethereum, Solana, and other tokens.
Recently, Galaxy completed what Novogratz calls "a transaction over $9 billion" that he believes is "the largest Bitcoin transaction or one of the largest transactions in history." The successful execution demonstrated strong market confidence in Galaxy's brand and services. July marked Galaxy's best month across all business lines.
Galaxy reported a second-quarter net income of $30.7 million, recovering from a $177 million loss the previous year. However, stocks dropped 7% on Tuesday as the company missed earnings estimates amid declining spot trading activity.
