No - Digital Credit Cannot Be Replicated With Bitcoin And Treasuries

Digital Credit scaling has attracted criticism, including claims that a published analysis contained factual mistakes and AI-generated content. The central claim is that Digital Credit could be replicated by combining U.S. treasury securities with BTC using a “simpler trade.” The claim is challenged as incorrect both empirically and economically. A key argument is collateral: Digital Credit is overcollateralized using corporate bitcoin holdings, creating committed external capital. Owning BTC and treasuries with one’s own equity does not create the same commitment, because the risk and funding remain solely with the investor. Credit structure therefore differs from a portfolio of BTC and treasuries.

"Their core argument was that Digital Credit could be better replicated by combining U.S. treasury securities with BTC. (This is what Onramp calls "the simpler trade" but I also fail to see how this is simpler considering that buying digital credit involves just one single ticker while "the simpler trade" involves a dynamic re-laddering of maturing treasury bonds combined with BTC held on a separate venue.)"

"Reason 1: Collateral Digital Credit is overcollateralized by corporate bitcoin holdings. This cannot be replicated with one's own equity because there is no committed external capital in the case of owning BTC and treasuries-it is all your own money and no one else is on the hook. Credit is different. Even"

"Onramp writes on Page 3: "Strategy has released AI-generated advertising featuring a young, attractive model in a tropical setting" But a quick viewing of the 30-second ad they are referencing shows that the woman worked "hard as an engineer", not a model. This is literally 10 seconds into the ad, which is about the same amount of time it took me to spot the error in Onramp's preface."

"This conclusion is wrong. It is trivial to show that it is wrong empirically (one just has to look at the daily returns time series of Digital Credit instruments vs a portfolio of IBIT and SGOV or IEF). But this missive will present multiple economic arguments for why we can know a priori that the claim is incorrect."

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