Major Bitcoin Investment by Leading Stablecoin Issuer
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Tether’s Strategic Bitcoin Acquisition
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In a bold financial maneuver, a prominent stablecoin issuer, Tether, has significantly expanded its investment portfolio by acquiring a substantial amount of Bitcoin. According to a recent filing with the US Securities and Exchange Commission dated May 13, Tether purchased 4,812 BTC at an average price of $95,319 per Bitcoin on May 9. This transaction adds approximately $460 million worth of Bitcoin to a dedicated escrow wallet associated with Twenty One Capital, a company supported by Tether and actively pursuing a SPAC merger with Cantor Equity Partners.
Tether’s Direct Engagement with Bitcoin
The decision to infuse nearly $460 million into Twenty One Capital’s Bitcoin holdings marks a significant shift for Tether, positioning them as a corporate Bitcoin holder. This strategic move increases Twenty One’s total Bitcoin reserves to 36,312 BTC. Of this, Cantor Equity Partners holds 31,500 BTC on behalf of Twenty One, with the remainder sourced directly from Tether’s reserves.
Fluctuating Share Prices and Market Impact
Upon the conclusion of its SPAC deal, Twenty One’s shares are expected to trade under the ticker XXI. According to CEO Jack Mallers, the necessary approvals are underway, although a specific date remains undisclosed. Investors have already witnessed notable volatility, with share prices surging from $10.65 to $59.73 on May 2, before dropping to $29.84, and then experiencing a 5.2% increase in after-hours trading following Tether’s latest purchase.
Prominent Supporters and Financial Backing
Tether is not the sole financial supporter of Twenty One. SoftBank has committed $900 million, while Bitfinex, another significant cryptocurrency player, plans to convert approximately 7,000 BTC into equity at a rate of $10 per share. Cantor Fitzgerald is spearheading the SPAC initiative, securing $585 million to facilitate additional Bitcoin acquisitions. These influential backers provide substantial support, yet introduce various risks related to market fluctuations and evolving strategies.
Ranking Among Top Corporate Bitcoin Holders
With its impressive Bitcoin reserves, Twenty One Capital is poised to become the third-largest corporate Bitcoin holder. Strategy, formerly known as MicroStrategy, leads with 568,840 BTC, followed by BMO-backed miner Marathon Digital, holding 48,237 BTC. Twenty One is striving to secure the third position, aiming to be a premier choice for investors seeking direct Bitcoin exposure.
Focus on Bitcoin per Share Growth
Twenty One’s approach is straightforward: prioritize increasing Bitcoin per share. Their SEC presentation highlights that profit is not the driving force behind their strategy. Instead, every dollar raised is dedicated to acquiring more BTC, diverging from the typical public company focus on earnings per share. Here, the primary objective is to enhance BTC holdings.
Investor Considerations and Future Prospects
The path via SPAC presents challenges, as SEC reviews can be protracted, and investors are attentive to any modifications in capital-raising terms. A surge in Bitcoin’s value could propel Twenty One to new heights, while a decline might expose them to risks, given the absence of operating profits to mitigate losses. For investors seeking pure Bitcoin exposure, this opportunity is enticing. However, those desiring consistent returns from fees or services may need to explore other avenues.
In the upcoming weeks, market observers will closely monitor the SEC’s decision and Twenty One’s management of its growing Bitcoin reserves. The outcome will influence whether stablecoin issuers emerge as key players in the Bitcoin market.
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