Michael Saylor’s software company, Strategy, has accumulated 580,000 bitcoins so far, solidifying its position as the largest publicly-traded bitcoin holder. Image source: coinstats |
Bitcoin has surged by 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 excitement among investors.
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’s 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 approximately $88 billion.
Many companies are trying to emulate the success of software company Strategy, which has accumulated 580,000 bitcoins so far, worth over $60 billion on the market.
Aaron Chan, a digital asset strategist at market maker Flow Traders (Netherlands), explained 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 flock back to the market, trying to create the next Strategy,” he said.
Some of the biggest names in the cryptocurrency market are gathering in Las Vegas for 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 markets to buy bitcoin, with plans to raise $585 million through a private placement of shares and convertible senior debt. To achieve this, Twenty One Capital agreed to merge with ‘blank check’ company Cantor Equity Partners, run by Brandon Lutnick, the 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 third-largest publicly-traded bitcoin holder, behind only Strategy and MARA Holdings. The main partners contributing to this bitcoin reserve include Tether (issuer of the stablecoin USDT), SoftBank, and Bitfinex exchange.
Strive Asset Management, an asset management company, and American Bitcoin, a bitcoin mining company partially owned by Trump’s sons, have announced similar merger deals to become publicly-traded, facilitating easier access to the capital markets.
On May 27, Strive announced plans to raise 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, Strategy, founded by billionaire Michael Saylor, 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 boosted the company’s valuation faster than bitcoin’s price appreciation. Strategy’s current stock market capitalization is $101 billion, while the market value of the bitcoins it holds is approximately $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 buying has helped support the price of bitcoin.
“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,” said Christophe Roehri, deputy CEO of digital asset management company TOBAM, which owns $3.9 million worth of Strategy’s shares.
Cryptocurrency executives hope that the wave of bitcoin buying with equity capital will increase the scarcity of bitcoin, pushing prices higher. Bitcoin’s supply is limited to 21 million units. 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 by about 120%. Meanwhile, shares of KindlyMD have increased by 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, the target of Strive Asset Management’s acquisition, have soared by 1,240% since the merger deal 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,” said Patrick Bush, a digital asset investment analyst at asset management firm VanEck.
Other analysts are skeptical that the scale of bitcoin buying from newcomers will be large enough to support bitcoin’s price.
TOBAM’s Roehri noted 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.
Chan of Flow Traders cautioned that Trump’s erratic tariff policies could dampen investor enthusiasm for publicly-traded companies raising capital to buy bitcoin.
The Soaring Price of Bitcoin Entices Companies to Join the Fray.
The number of publicly traded companies holding bitcoin globally rose from 89 at the beginning of April to 113 by the end of May. Among these companies, the largest holder boasts a staggering 580,000 bitcoins in its reserves. This emerging trend signals a growing acceptance and integration of bitcoin into the mainstream investment landscape.
The Capital Conundrum: Strategies for Navigating the Financial Maze.
“Capital flows freely as banks introduce a plethora of loan packages with attractive interest rates. However, many small and medium-sized enterprises (SMEs) are left behind due to various reasons such as ineligible requirements, lack of collateral, and other factors that prevent them from accessing these financial opportunities.”
The Trump Media Empire Raises $3 Billion for Crypto Ventures
The Trump administration and the former President’s family have emerged as avid supporters of digital assets.
The Crypto Craze: Beyond Bitcoin, the Rise of Altcoin Trading on Stock Exchanges
Many businesses are pouring capital into Ether, Litecoin, and $TRUMP, eager to emulate Michael Saylor’s successful strategy.
The Hunt for Bitcoin: Trump’s Son Ventures into Crypto in Asia
Recognizing the potential in Asia – a hotbed of interest in digital assets – Donald Trump Jr. and Eric Trump are seeking to penetrate this market.
