The rise of bitcoin treasury companies is reshaping capital markets, with firms like Twenty One behind a seemingly transformative wave. Greg Cipolaro, Global Head of Research at NYDIG, recently highlighted the significant “dry powder” these companies possess, capable of driving bitcoin prices higher.
This trend, rooted in the business model of Strategy (formerly Microstrategy), is gaining momentum, with 69 public companies now holding 720,898 bitcoins worth $69.6 billion.
Excluding Strategy, their holdings total $16.1 billion, underscoring the growing adoption of bitcoin as a treasury reserve asset.
Strategy’s bitcoin accumulation strategy, initiated in August 2020, has yielded a 2,974.8% total return, making it the third-best-performing stock in the Russell 3000.
This success has inspired other firms, such as Japan’s Metaplanet, to adopt similar playbooks, reporting metrics like “bitcoin per share” and “bitcoin yield.”
However, Twenty One, a newly formed bitcoin-native company, stands out.
Launched last week through a merger with Cantor Equity Partners SPAC and backed by Tether, Bitfinex, and SoftBank, Twenty One is led by Strike CEO Jack Mallers.
Unlike its predecessors, it is not an operating company repurposing its model but a purpose-built vehicle designed to maximize bitcoin holdings per share and develop bitcoin-native financial products.
Twenty One’s announcement has caught the attention of investors, propelling Cantor Equity Partners’ shares to outperform the S&P 500 by 347.0% as of Thursday’s close.
This rally far exceeds the market response to similar announcements by other bitcoin treasury companies.
The enthusiasm stems from Twenty One’s structural advantages: a substantial initial bitcoin position and significant capacity to issue debt and equity.
This flexibility provides a long runway to scale its holdings, fueling investor optimism about its potential to drive bitcoin’s value higher.
The valuation of bitcoin treasury companies remains a subject of debate.
Many trade at premiums to their net asset value (NAV), including bitcoin holdings and underlying businesses.
Analysts have proposed unconventional metrics, such as the ratio of market capitalization to bitcoin holdings, which ranges from 4.9x for Twenty One to 1.2x for Semler Scientific.
This variance highlights the lack of consensus on how to value these firms.
Enterprise value—market capitalization minus cash and bitcoin holdings, plus non-convertible debt—offers another lens.
The gap between current enterprise values and those before bitcoin treasury adoption suggests markets may undervalue some firms, like Semler Scientific, creating potential investment opportunities.
The broader market implications are considered to be profound.
For instance, Bitcoin treasury companies could generate significant buying pressure through at-the-money stock offerings to fund further bitcoin purchases.
If these firms leverage their issuance capacity, the cumulative increase in equity value could theoretically translate into a $42,000 price increase per bitcoin, assuming a 10x “money multiplier” effect on bitcoin’s market cap.
This potential underscores the transformative impact of these strategies on bitcoin’s price dynamics.
Market conditions support this bullish outlook.
Bitcoin rose 3.2% this week, aligning with a broader relief rally that saw the S&P 500 and Nasdaq Composite gain 2.2% and 3.2%, respectively.
Spot bitcoin ETFs have attracted $4.2 billion in inflows since mid-April, with BlackRock’s IBIT alone drawing $971 million on Monday.
Negative funding rates in perpetual swaps suggest bearish trader positioning, a contrarian signal, while CME futures show balanced demand with mid- to high-single-digit annualized premiums.
Anthony Pompliano, CEO of Professional Capital Management, attributes bitcoin’s resilience to investors seeking safety in sound money amid economic uncertainty.
Despite fears of tariffs and slowing growth, he notes that markets are forward-looking, with increasing clarity on trade policies boosting confidence.
Pompliano predicts bitcoin, gold, and U.S. stocks could hit new highs by year-end, driven by the U.S.’s technological and economic strength.
As bitcoin treasury companies like Twenty One attempt to redefine capital allocation, their capacity to scale holdings could potentially catalyze significant price appreciation.
With market support and financial structures, this trend signals a new development in bitcoin’s integration into global finance.