Michael Saylor’s software company, Strategy, has accumulated 580,000 bitcoins so far, solidifying its position as the world’s largest publicly-traded bitcoin holder. Image source: coinstats |
Bitcoin has surged 50% from its lows in early April to an all-time high of $111,965 last week. This has sparked a wave of companies rushing to raise capital through equity or debt offerings, with the aim of using the proceeds to buy and hoard large amounts of bitcoin or other cryptocurrencies, capitalizing on the enthusiasm of investors in the market.
On May 27, Trump Media, a media company run by former President Donald Trump’s family, confirmed plans to raise $2.5 billion to build a “bitcoin treasury.” Specifically, about 50 institutional investors committed to investing $1.5 billion to buy Trump Media shares through a private placement and an additional $1 billion to purchase convertible debt.
According to BitcoinTreasuries.net, the number of publicly-traded companies holding bitcoin has increased from 89 in early April to 113 as of May 26. These companies are holding over 800,000 bitcoins, worth about $88 billion.
Many companies are trying to emulate the success of software company Strategy, which has accumulated 580,000 bitcoins, worth over $60 billion on the market.
Aaron Chan, a digital asset strategist at market maker Flow Traders (Netherlands), explains that favorable market conditions, such as the easing of the US-China trade war and lower cryptocurrency market volatility, are supporting the issuance of additional shares and debt aimed at raising capital to buy bitcoin.
“As long as this trend continues, investors will return to the market in an attempt to create the next Strategy,” he says.
Some of the biggest names in the cryptocurrency market are gathering in Las Vegas to attend the annual bitcoin conference taking place from May 27 to 29. Last year, speaking at this conference, Trump pledged to make America the “bitcoin powerhouse of the world” if elected president.
Twenty One Capital is among the companies tapping the capital market to buy bitcoin, with plans to raise $585 million through a private placement of shares and convertible senior debt. To execute this plan, Twenty One Capital agreed to merge with ‘blank check’ company Cantor Equity Partners, run by Brandon Lutnick, son of US Secretary of Commerce Howard Lutnick.
Twenty One Capital is expected to launch with a treasury of 42,000 bitcoins, making it the world’s third-largest publicly-traded bitcoin holder, after Strategy and MARA Holdings. The main partners contributing to this bitcoin reserve include Tether (issuer of the stablecoin USDT), SoftBank, and Bitfinex exchange.
Asset manager Strive Asset Management (US) and bitcoin miner American Bitcoin, in which Trump’s sons own a stake, have announced similar merger deals to become publicly-traded, facilitating easier access to the capital market.
On May 27, Strive announced a target of raising up to $1.5 billion to support its “first wave of bitcoin purchases.”
Earlier this month, ‘blank check’ company Nakamoto Holdings announced a merger with healthcare company KindlyMD to establish a bitcoin treasury. David Bailey, CEO of Nakamoto, stated that the company is developing various financial products related to bitcoin to attract investors.
For many business leaders in the cryptocurrency industry, Saylor’s Strategy remains the quintessential example of how the stock market is being used to tap into the bitcoin investment demand.
In 2020, the billionaire began buying bitcoins for Strategy’s reserves. He transformed Strategy into a highly leveraged investment vehicle, sensitive to bitcoin price movements. Strategy’s large-scale bitcoin purchases were funded by selling common stock, preferred stock, and convertible debt.
This effort has driven the company’s valuation to surge faster than bitcoin. Strategy’s stock market capitalization now stands at $101 billion, while the market value of the bitcoins it holds is about $64 billion. This is because investors are betting that the value of the bitcoins held by the company will increase faster than the rate at which the company dilutes its shares.
Executives and investors argue that Strategy’s aggressive bitcoin purchases have helped support the bitcoin price.
“Twenty One Capital’s initiative to establish a bitcoin treasury, along with similar plans from other companies, is increasing the demand for bitcoin. This is a catalyst for bitcoin’s price to go higher,” says Christophe Roehri, deputy CEO of digital asset manager TOBAM, which owns $3.9 million worth of Strategy shares.
Cryptocurrency executives hope that the wave of bitcoin purchases funded by equity will increase the scarcity of bitcoin, pushing prices higher. Bitcoin’s supply is limited to 21 million coins. Companies involved in merger deals to raise capital to buy bitcoin are seeing their stock prices rise.
Shares of Gryphon Mining, the acquisition target of American Bitcoin, have surged about 120%. Meanwhile, shares of KindlyMD have skyrocketed 540% since they announced the merger deal with ‘blank check’ company Nakamoto Holdings on May 12.
On May 27, KindlyMD confirmed the purchase of 21 bitcoins at an average price of $109,027 each as part of its bitcoin treasury strategy.
Shares of Asset Entities, which is being acquired by Strive Asset Management, have soared 1,240% since the merger agreement between the two companies was announced.
However, analysts warn that replicating Saylor’s success will not be easy.
“Market demand for bitcoin-linked equities will not materialize automatically,” says Patrick Bush, a digital asset investment analyst at asset manager VanEck.
Other analysts doubt that the scale of bitcoin purchases by newcomers will be large enough to support the bitcoin price.
TOBAM’s Roehri notes that Strategy only owns 2.7% of the total circulating bitcoin supply. This percentage is still small compared to traditional financial markets such as stocks.
Flow Traders’ Chan warns that Trump’s erratic tariff policies could dampen investor enthusiasm for publicly-traded companies raising capital to buy bitcoin.
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