Altcoin projects are buying Bitcoin

The debate over burning quantum-vulnerable Bitcoin has simmered for years, but it’s now gaining traction among influential Bitcoin community members (Peter Wuille, Jameson Lopp, @calle/@niftynei). Their push or acceptance for a hardfork to destroy these coins, often cloaked in good intentions, threatens the core of Bitcoin’s promise: property rights for anyone, independent of institutional control.

Bitcoin exists to secure property rights without reliance on governments. Its fixed supply prevents value theft through inflation, and its design ensures coins can’t be seized or reassigned by fiat. The whole point is that no one can steal from you. All other benefits—easier economic calculation, lower time preference—stem from this foundation.

Many may consider this quite ironic given that the threat of quantum computers is exactly that: theft. But this is the point everyone gets wrong. There is in fact no appreciable threat of theft from quantum computers. The threat of theft stems only from well-meaning interventionalists.

A hardfork is state-like intervention in the Bitcoin network, imposing the majority’s will on a minority. It’s only justified in existential crises, 

like a direct threat to the network’s survival. Quantum computing isn’t that threat. Practical quantum computers capable of breaking ECDSA are at least a decade away, giving us ample time to soft-fork quantum-resistant address formats and voluntarily move coins to safer addresses. In fact, owners of vulnerable P2PK addresses can already transfer funds to secure formats like P2PKH—unless of course, they don’t actually own the coins.

There is not a single person who will not have ample time and opportunity to move their coins to non-vulnerable addresses. Any and all coins remaining in quantum vulnerable addresses at the advent of quantum computers should be considered either as donations to those developing such machines, or ownerless. If something is ownerless it is fair game to anyone who can claim ownership over it.

The argument for burning coins hinges on fear: roughly 1.7 million P2PK coins, often labeled “lost,” could be vulnerable. But “lost” doesn’t necessarily mean unowned. We simply don’t know if anyone owns them. Some claim 25% of Bitcoin’s supply is at risk, but this adds coins being currently used in unsafe ways, such as exchanges reusing addresses—a practice unlikely to persist in a quantum era. If owners of vulnerable coins choose not to move them, that’s their right. I find the very idea of burning coins that are not your own squarely contradictory to Bitcoin’s ethos.

I also cannot find any evidence to support the argument that these coins represent some threat to market stability. Below, I have listed all coins in P2PK addresses and grouped them by size band. There are only about 10,200 BTC in addresses that could cause any market disruption. Given how small these balances are, this disruption would be both minor and temporary. A single middle-sized bitcoin treasury being liquidated would have a bigger impact. Moreover, the effect of the coins in any of these addresses coming to market at any given time is not distinguishable from current whale behavior. 

Cardano and Polkadot propose bitcoin purchases

During a youtube livestream on June 12th, Cardano co-founder Charles Hoskinson proposed converting $100m of its project token (ADA) to a mix of stablecoins and bitcoin (or bitcoin-pegged stablecoins). Polkadot is discussing a similar proposal originating from a pseudonymous community member to convert $1-2m worth of its token (DOT).

The motive on both fronts is a mix of spurring Bitcoin-related financial services activity within their respective ecosystems as well as the diversification benefits of bitcoin in managing their treasuries more like a portfolio.

Total protocol treasuries hold 100k BTC worth of their own token

We were curious of the potential opportunity size of these project treasuries, so we aggregated their dollar value held both in total and specifically in project tokens. The latter meaning – how much ADA does Cardano hold in its treasury or UNI in Uniswap’s treasury. The table summarizes these totals in both dollars and bitcoin terms.

Certainly no small sum but this is not the kind of demand, in and of itself, that is particularly exciting from a price driving perspective. For context, Strategy (formerly MicroStrategy) alone has taken 145k bitcoin onto its balance sheet this year, a total greater than all project treasuries combined. 

Of course, we would not expect all treasuries to ultimately allocate, nor ones that do to fully deploy their treasuries into BTC. A 1-10% allocation would make more sense. If that were the case, allocations simply taken from projects’ own tokens would total US$100m - 1 bn, equivalent to Strategy last acquisition on June 16th or about an average week of bitcoin ETP net inflows in 2025. Should these allocations be 1-10% of their full treasury size, the total modestly increases to US$130m - 1.3 bn.

Not to belittle this idea, because we do encourage these projects to consider adopting bitcoin as a treasury asset, but from an bitcoin investor’s standpoint the market impact of this trend would not impress. Marginal impact, yes, but it should not be viewed as the same kind of potential demand driver as say, adoption from corporate finance or the professional investment communities.

Why might they buy Bitcoin?

Poor performance and following the "Bitcoin Treasury company" playbook

These proposals come as a growing number of public companies, especially SPACs, tap into traditional capital markets specifically to buy bitcoin. Metaplanet, Smarter Web Company, and 21 Capital are recent examples. These firms are copying the Strategy formula and branding themselves as Bitcoin treasury companies, which appears to resonate with some investors. Altcoin protocols may then be taking cues, especially as these companies rise in share price and traditional narratives around token utility economics have diminished.

Further, the small sample size of proposals are coming from projects that have existed for 5+ years, with associated tokens that have underperformed against bitcoin. As the prospects of bitcoin adoption improve with institutional flows, regulatory advances, and a steady integration into traditional finance, the question becomes: why continue holding volatile, less liquid tokens when you can diversify into the asset that markets are actively adopting?

Will more altcoin foundations buy Bitcoin?

Probably not. Without broad community voting, they risk nasty pushback, potentially received as an admission from the project team to investors that bitcoin will be a more performant investment than the project’s token. In which case, why wouldn’t investors just buy the better performer that carries less risk. Alternatively, in the case an allocation must go through a public voting process, a coordination and communication challenge arises for a token community to broadly agree and then implement the allocation.

Not to mention, Solana’s Anatoly Yakovenko immediately questioned Hoskinson on X as to why protocols would hold bitcoin rather than their own tokens or USD.

Nonetheless, our assumption here is that altcoins still command a strong investor belief of outperforming bitcoin, regardless of both historical precedent and that likelihood moving forward. Further, enacting this decision is not simply a matter of optimal portfolio construction, it’s also a social matter for each project.

This is not like Terra Luna, to be clear

The last major experiment with protocol-held BTC that swept the news cycle was Luna Foundation Guard's failed defense of UST (Terra USD) in 2022. The fund dumped 80,000 BTC during the collapse, dragging the bitcoin price down with it. Today’s proposals are very much not performing the same activities, they are holding BTC as an investment instead of an emergency fund backing a stablecoin. The intent is to manage a growing treasury, more akin to a corporate strategy than a bank reserve. Given the attention the Terra Luna blowup commanded, we wanted to draw this distinction.

Closing thought

Whether these proposals make for a genuine shift in treasury management or simply a bull market news item remains to be seen. Still, it’s telling that crypto projects once built on distancing themselves from Bitcoin are now potentially circling back to it. Not because they suddenly believe in the Bitcoin ethos, but because bitcoin is liquid, trusted, and increasingly proven in the market. If for nothing else, this trend underscores a hard truth for many altcoin projects, tokenomics and genuine adoption are very difficult to generate, and bitcoin is by far — not really even close — the furthest along among crypto assets.