The recent surge in Bitcoin prices, which has seen the cryptocurrency reach an all-time high of nearly $112,000, has spurred a growing number of companies to invest in digital currencies. Many organizations are issuing stocks and bonds with the aim of channeling the proceeds into Bitcoin investments. Although this approach dilutes their capital, the potential returns from rising Bitcoin valuations could be significant. The underlying concept is that the exceptionally high demand, combined with a capped supply of 21 million coins, will continue to drive up the price of the original cryptocurrency.
Essentially, these companies are adopting the Strategy model championed by billionaire Michael Saylor. The company, formerly known as MicroStrategy, began its Bitcoin accumulation in 2020 during the height of the pandemic. As a result, this software firm has transformed into a leveraged investment vehicle that is highly reactive to Bitcoin’s market fluctuations. To fund its extensive holdings of approximately 580,000 bitcoins, Strategy has sold common and preferred shares as well as convertible bonds. Over the years, the company’s valuation has outpaced its Bitcoin holdings. Today, Strategy boasts a market cap of over $100 billion, while its Bitcoin assets are valued at around $64 billion.
Companies Following in Strategy’s Footsteps
As reported by the online platform BitcoinTreasuries.net, the number of publicly traded companies holding Bitcoin has increased from 89 in early April to 113 currently, amassing a total of more than 800,000 bitcoins worth an estimated $88 billion.
Notably, Twenty One Capital, led by Jack Mallers, stands out among these firms. Mallers played a significant role in influencing El Salvador’s decision to adopt Bitcoin as a legal currency. This venture was established in collaboration with Cantor Equity Partners, which is headed by Brandon Lutnick, the son of U.S. Commerce Secretary Howard Lutnick. The project has garnered backing from SoftBank and the stablecoin provider Tether.
Another noteworthy example is Strive Asset Management, founded by American politician Vivek Ramaswamy. The firm has announced its intention to merge operations to give its Bitcoin acquisition vehicle access to a public listing, thus enabling it to raise additional funds. Recently, Strive expressed its goal to raise up to $1.5 billion to support an initial wave of Bitcoin purchases.
In this context, the blank-check company Nakamoto Holdings is merging with the opioid healthcare group KindlyMD to establish a Bitcoin treasury. David Bailey, the CEO of Nakamoto, stated that the firm is exploring various ways to package Bitcoin to attract buyers from different markets.
According to Christophe Roehri, the deputy CEO of digital asset manager Tobam, the trend of increasing interest in Bitcoin “mechanically elevates the demand for it, which could act as a catalyst for price hikes.”
Can Others Replicate Strategy’s Success?
There is considerable interest in whether the Strategy model can be successfully emulated, especially given its past successes. However, some experts harbor doubts. “We are still quite far from what Strategy has achieved,” remarked Roehri, noting that Saylor’s company holds merely 2.7% of all circulating bitcoins—a relatively small stake compared to traditional financial markets.
Aaron Chan, an asset strategist at the Dutch market maker Flow Traders, believes external factors, such as policies from former U.S. President Donald Trump, may dampen investor enthusiasm. He pointed out that “a significant limiting factor for all these imitators, as well as for the Strategy model, is the capacity of the capital markets to navigate these challenges.” If volatility in equity markets persists alongside uncertainty regarding interest rates, Bitcoin could experience headwinds, making investors hesitant to invest in newcomers.
