Billionaire Michael Saylor's software company Strategy has so far accumulated 580,000 bitcoins, cementing its position as the world's largest public bitcoin holder. Photo: coinstats
Bitcoin has rallied 50% from its low in early April to an all-time high of $111,965 last week. That has sparked a wave of companies raising capital through stock or bond issuance, with the goal of using the proceeds to buy and hold large amounts of bitcoin or other cryptocurrencies, capitalizing on investor enthusiasm in the market.
On May 27, Trump Media, a media company run by President Donald Trump’s family, confirmed plans to raise $2.5 billion to buy and 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 buy senior convertible bonds.
According to BitcoinTreasuries.net, the number of public companies holding bitcoin has increased from 89 at the beginning of April to 113 as of May 26. These companies are holding more than 800,000 bitcoins, worth about $88 billion.
Many companies are trying to emulate the success of software company Strategy, which has so far accumulated 580,000 bitcoins, which have a market value of more than $60 billion.
Favorable market conditions, such as the easing of the US-China trade war and lower cryptocurrency market volatility, are supporting the issuance of additional stocks and bonds to raise capital to buy bitcoin, explained Aaron Chan, digital asset strategist at Dutch market maker Flow Traders.
“As long as this trend continues, investors will return to the market to try to create the next Strategy,” he said.
Many of the biggest names in the cryptocurrency market are gathering in Las Vegas for the annual bitcoin conference, which runs from May 27 to 29. Last year, Trump spoke at the conference, pledging to make the United States the “bitcoin superpower 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 senior convertible bonds. To do so, Twenty One Capital agreed to merge with the “blank check” firm Cantor Equity Partners, run by Brandon Lutnick, son of US Commerce Secretary 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 in the world, behind Strategy and MARA Holdings. Major contributors to the bitcoin reserve include Tether (issuer of the stablecoin USDT), SoftBank, and exchange Bitfinex.
US asset management firm Strive Asset Management and bitcoin mining company American Bitcoin, in which Mr Trump's two sons own a stake, have announced similar mergers to become publicly traded companies, giving them easier access to capital markets.
Strive said on May 27 that it aims to raise up to $1.5 billion to support the “first wave of bitcoin purchases.”
Earlier this month, the 'blank check' company Nakamoto Holdings announced a merger with healthcare company KindlyMD to form a bitcoin repository. Nakamoto CEO David Bailey said the company is developing various bitcoin-related financial products to attract investors.
For many business leaders in the crypto space, billionaire Michael Saylor’s Strategy remains the best example of how the stock market is being used to tap into bitcoin investment demand.
In 2020, the billionaire began buying bitcoin for Strategy’s reserves. He transformed Strategy into a highly leveraged investment vehicle, highly sensitive to bitcoin price movements. Strategy’s large bitcoin purchases were financed by selling common stock, preferred stock, and convertible bonds.
That effort has driven the company’s valuation up faster than bitcoin. Strategy’s stock market capitalization is now $101 billion, while the market value of its bitcoin holdings is about $64 billion. That’s because investors are betting that the value of the company’s bitcoin holdings will rise faster than the company can dilute its shares.
Strategy's aggressive bitcoin purchases have helped support bitcoin prices, executives and investors argue.
“Twenty One Capital’s initiative to create a bitcoin reserve, along with other companies with similar plans, is increasing demand for bitcoin. This is a catalyst for higher bitcoin prices,” said Christophe Roehri, deputy CEO of digital asset manager TOBAM, which owns $3.9 million in Strategy shares.
Cryptocurrency executives hope the wave of equity purchases of bitcoin will increase the scarcity of bitcoin, pushing the price higher. Bitcoin is limited to 21 million coins. Companies involved in mergers and acquisitions to raise capital to buy bitcoin are seeing their stock prices rise.
Shares of Gryphon Mining, a takeover target for American Bitcoin, have risen about 120%, while KindlyMD shares have risen 540% since announcing a deal to acquire the 'blank check' company Nakamoto Holdings on May 12.
On May 27, KindlyMD confirmed it purchased 21 bitcoins at an average price of $109,027 per coin as part of its bitcoin treasury strategy.
Shares of Asset Entities, the company being acquired by Strive Asset Management, have surged 1,240% since the merger deal between the two companies was announced.
However, analysts warn that replicating billionaire Saylor's success will not be easy.
“Market demand for bitcoin-linked securities is not going to happen automatically,” said Patrick Bush, digital asset investment analyst at asset manager VanEck.
Other analysts are skeptical that the scale of bitcoin purchases from new players will be large enough to support bitcoin prices.
TOBAM's Christophe Roehri notes that Strategy owns only 2.7% of all bitcoin in circulation, a small percentage compared to traditional financial markets like stocks.
Mr Trump's erratic tariff policies could dampen investor enthusiasm for public companies raising capital to buy bitcoin, Flow Traders' Chan warned.
Source: KTSG Online
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