Bloomberg Chief Financial Writer: When Every Company Wants a Bitcoin War Chest
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Bloomberg Chief Financial Writer: When Every Company Wants a Bitcoin War Chest
Why are U.S. listed companies starting to go crazy buying cryptocurrency? When will it reach saturation?
Navigating Web3 tides with focused insightsBy: Matt Levine
Translation: jk
Bitcoin Treasuries
The basic logic goes like this: the U.S. stock market is willing to pay $2 for $1 worth of cryptocurrency. If you have a large amount of crypto, your best move is to merge with a small U.S. public company so that your crypto doubles in value. This phenomenon has created some odd market dynamics and will generate even more strange ones. Two worth noting are:
First, if you hold a large amount of cryptocurrency, you definitely need a public company, making it a good business to offer shell companies to crypto investors (especially small public firms with little existing operations, which can easily transform into pure crypto holding platforms). For example, if you have $100 million in Bitcoin, merging with a public company could double its value to $200 million—so you'd be willing to pay $40 million to the shell's shareholders even if the company has no intrinsic value beyond its listing status.
Second, if you hold a large amount of cryptocurrency, don't sell it to crypto buyers—sell it to the stock market. Suppose you own 1,000 bitcoins; selling them on the crypto market yields $118 million, but packaging them into a crypto treasury company and listing it could fetch $236 million.
On the first point, we often discuss cases where small public companies are acquired by crypto entrepreneurs and transformed into crypto treasury vehicles. But this process is inefficient and arbitrary: if you want to list a crypto holding on a securities exchange, why must you find a defunct biotech上市 company, negotiate with its executives, finalize a deal, and then lay off the biotech researchers? Why don’t investment banks just offer ready-made public shells, eliminating the need to repurpose biotech/toy/alcohol companies and allowing you to start from scratch?
Well, banks do exactly this. The business—providing public shell companies—is the SPAC (Special Purpose Acquisition Company) business. Cantor Fitzgerald LP (whose former CEO is now U.S. Secretary of Commerce) specializes in this: both in raising traditional SPACs and in facilitating SPAC mergers with Bitcoin pools. We mentioned Cantor Equity Partners Inc. in April—a SPAC sponsored by Cantor that announced an agreement with Bitfinex/Tether and SoftBank to package their Bitcoin into a public company. The entity will be named Twenty One Capital Inc., and the SPAC currently trades at about a 200% premium to its Bitcoin value. This is a great deal for Tether and SoftBank—and also for Cantor, the SPAC sponsor, which will earn substantial fees.
Here’s a press release issued this morning:
Bitcoin Standard Treasury Company Goes Public via Business Combination with Cantor Equity Partners I Inc.
BSTR will launch with 30,021 Bitcoins on its balance sheet—making it the fourth-largest public Bitcoin treasury—and secure up to $1.5 billion in PIPE financing, the largest PIPE associated with a Bitcoin treasury SPAC merger to date, plus approximately $200 million from the SPAC itself (subject to redemptions).
BSTR Holdings Inc. (“BSTR” or the “Company”) today announced it has entered into a definitive agreement for a business combination with Cantor Equity Partners I, Inc. (“CEPO”) (Nasdaq: CEPO), a special purpose acquisition company sponsored by an affiliate of Cantor Fitzgerald, a leading global financial services and real estate services holding company. Upon completion of the transaction, the combined company is expected to trade under the ticker symbol “BSTR”…
Net proceeds will be used to acquire additional Bitcoin and build a full suite of Bitcoin-native capital markets products and advisory services.
Yes, exactly. BSTR holds roughly 30,021 bitcoins. If sold directly, they’d be worth about $3.5 billion, but through a public listing, their value should be at least $7 billion. Cantor Fitzgerald provides public shells specifically for Bitcoin pools, so BSTR chose to merge with Cantor Equity Partners I—not the same SPAC involved in the Twenty One deal—to bring its Bitcoin holdings to the public market. BSTR’s Bitcoin will be worth far more as a listed stock than as Bitcoin itself, and the SPAC sponsor Cantor will take a cut.
But I want to focus on the second oddity: “If you have a lot of cryptocurrency, don’t sell it to crypto buyers.” Cantor Fitzgerald has already launched a crypto treasury firm called Twenty One. Its business model includes: (1) accumulating Bitcoin, (2) maintaining a public listing, and (3) talking big about innovation, the future of money, Bitcoin capital markets services, etc. BSTR’s model is essentially identical. Twenty One is a Bitcoin pool. BSTR is a Bitcoin pool. Why do they both need separate listings? Why should investors have to choose between two nearly identical pure Bitcoin treasuries? (Not to mention others in the market, and MicroStrategy. I’m just saying: two large Bitcoin pools are going public via Cantor Fitzgerald SPACs within months of each other.)
You could imagine a scenario: people from BSTR go to Cantor Fitzgerald saying, “We have a Bitcoin pool and need capital markets advice,” and Cantor replies, “Great—we actually know the Twenty One team quite well. We helped them go public. They have a large Bitcoin pool, with ‘an enterprise architecture capable of supporting financial products based on Bitcoin,’ built on ‘strategically allocating capital to increase per-share Bitcoin holdings.’ And their stock trades at a big premium to Bitcoin. So here’s our idea: we’ll contact them, have them issue shares to raise funds, and buy your Bitcoin pool at a good price. How about it?”
But that would be stupid, because BSTR doesn’t want to sell its Bitcoin as Bitcoin. If you sell Bitcoin on the crypto market, you get Bitcoin prices! But if you wrap Bitcoin into stock, you can sell it at a 100% premium! BSTR wants to go public itself, not sell its Bitcoin pool to someone else.
Here’s how the Financial Times reported the deal on Tuesday:
Cantor Equity Partners 1, a $200 million blank-check company that raised funds in an IPO in January, is in late-stage talks with Adam Back, founder of crypto trading group Blockstream Capital, to acquire more than $3 billion in digital currencies, according to two people familiar with the matter.
The deal echoes Brandon Lutnick’s $3.6 billion crypto acquisition with SoftBank and Tether in April and further advances Cantor Fitzgerald’s strategy of using public shell companies to acquire Bitcoin, aiming to capitalize on surging cryptocurrency prices amid President Donald Trump’s deregulatory agenda…
Back and Blockstream Capital will exchange their Bitcoin for shares in the Cantor vehicle, which will be renamed BSTR Holdings.
In one view, this means Cantor is “acquiring” Blockstream’s Bitcoin, just as it previously “acquired” SoftBank and Tether’s Bitcoin. But Cantor can do so at a steep premium: instead of paying cash, it pays Blockstream in shares of a newly formed public Bitcoin company—shares that typically trade at over 100% premium to the underlying Bitcoin. Cantor’s “currency”—public Bitcoin company stock—is more valuable than cash.
Twenty One has similar “currency” (its own shares). You could imagine a deal where Twenty One buys Blockstream’s Bitcoin with its stock. But at what price? The core of the Bitcoin treasury model is that Twenty One can issue shares at a premium, use the proceeds to buy Bitcoin, and thus increase per-share Bitcoin holdings. But that’s also the core of Blockstream’s model. Blockstream wants a premium for its Bitcoin holdings, but Twenty One doesn’t want to pay a premium to acquire more Bitcoin. (It wants to “strategically allocate capital to increase per-share Bitcoin holdings.”) Transferring Bitcoin to the public market creates massive value, and every holder of a Bitcoin pool wants to capture that value for themselves.
Is this sustainable long-term? If every major Bitcoin holder can make more money by launching their own Bitcoin treasury company, how can existing treasury firms keep acquiring more Bitcoin? Well, there are still smaller holders; if you only have 0.1 Bitcoin, you won’t bother going public, so you’ll still sell to MicroStrategy, Twenty One, BSTR, or others. Eventually, I suspect we’ll see stock-for-stock mergers among Bitcoin treasury companies. Lower-premium firms will be acquired by higher-premium ones. I look forward to reading the fairness opinions on those deals.
In any case, so far, the BSTR deal doesn’t seem to be performing well: at noon today, the SPAC traded around $13.93 per share, implying only about a 39% premium on BSTR’s Bitcoin holdings—far below the typical 100%+ premium I’d expect. Maybe the market for these deals is finally saturating?
Meme Coins: Don’t Ask, Just Feel the Vibe
In traditional financial engineering, you work at a bank and a client says, “I want a tradable instrument X that reflects the price of something else Y,” and you have to figure out how to link X and Y. Maybe you design an arbitrage mechanism allowing holders of Y to exchange it for X, keeping prices aligned. Maybe you create a basket of Y and make X a tradable share of that basket. Maybe you call three banks daily to quote Y, average the prices, and use that as X’s daily settlement. Maybe X’s price is derived from historical levels of a non-tradable index of Y. The solution varies, but it’s generally hard. For example, “I want a tradable instrument reflecting U.S. home prices”: sure, sounds good—we all want that—but which homes exactly? How do you ensure the instrument accurately tracks prices?
Then crypto delivers a truly brilliant financial innovation: you can skip all that complexity and rely purely on “vibes.” You announce, “I’m launching a new token, HomePriceToken, which reflects U.S. home prices.” A traditional finance person like me might ask, “Wait, how does it reflect prices?” You reply, “It just does. It’s called HomePriceToken—what’s the problem?” I persist: “Is there an arbitrage mechanism—” You interrupt: “Stop overthinking. It’s HomePriceToken.”
This innovation is commonly known as “meme coins.” I often joke about it, but it’s a fascinating conceptual breakthrough. The meme coin idea is: (1) it has a name linking it to some underlying thing, and (2) its trading price correlates with that thing—not due to arbitrage mechanisms, but simply because of the name. When people think more about Doge, Dogecoin’s price goes up. That’s it.
This is interesting because it opens the door to financializing things that normally have no price. Home values are somewhat trackable—though complicated by liquidity and aggregation issues—but meme coins aren’t limited to traditional assets. They can reflect summer hit songs, actor popularity, or the health of American democracy. Not in the way prediction markets work—not settled on external facts—but within the meme coin universe itself. If DemocracyCoin goes up, democracy is improving; if it falls, it’s deteriorating. Don’t ask why.
I’m not saying it’s not absurd—of course it’s absurd—but it’s an interesting kind of absurdity. Here’s Taylor Lorenz reporting on Gen Z slang meme coins:
Every day, 20-year-old college student Boeshi scrolls social media looking for new words and phrases. He tracks usage of terms like huzz, soyboy, baddie, mewing—not just to chat with friends, but to invest and make money.
As new Gen Z and Alpha generation slang terms gain popularity, a full financialized ecosystem has quietly emerged. Young people are putting real money into meme coins tied to trending slang, hoping to profit from viral buzz.
“These dumb words—the more people use them, the higher the coin price,” Boeshi says. “The hotter the word, the hotter the coin.”
“Is there an arbitrage mechanism between word usage and coin price?” I interject, but my brain immediately freezes as Boeshi cheerfully ignores the question.
In this emerging attention economy, virality equals monetary value. If a term is trending, its coin spikes. When the hype fades, the price drops. “When a word starts going viral, you’ll see it correlate with Google search peaks,” Boeshi says. “And the decline matches the coin’s historical price action.” Currently, dozens of slang meme coins are tradable on alternative crypto site Pump.fun.
Fine. Huzz. Rizz. Skibidi. Also, here’s a full research paper by Alberto Maria Mongardini and Alessandro Mei on meme coin manipulation:
Unlike utility-focused cryptocurrencies such as Bitcoin or Ethereum, meme coins derive value primarily from community sentiment, making them vulnerable to manipulation. This study conducts a cross-chain analysis of the meme coin ecosystem, examining 34,988 tokens across Ethereum, BNB Smart Chain, Solana, and Base. We describe the tokenomic characteristics of meme coins and track their growth through a three-month longitudinal analysis. We find that a staggering 82.6% of high-return tokens (>100%) show evidence of extensive artificial growth strategies designed to create a false impression of market interest. These include wash trading and what we define as Liquidity Pool Inflation (LPI)—using small, strategic purchases to trigger dramatic price increases. We also find evidence of schemes intended to harm investors for private gain, such as pump-and-dump and rug pulls. Notably, most involved tokens had previously experienced wash trading or LPI, suggesting early manipulation often paves the way for subsequent exploitation. These findings reveal the prevalence of manipulation among high-performing meme coins and suggest their dramatic rallies are more likely driven by coordinated artificial activity than organic market dynamics.
Imagine launching one of the 17.4% of meme coins that weren’t manipulated. Seems lazy.
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