Twenty One Capital Inc., the latest player in the cryptocurrency space, experienced a shaky start on the New York Stock Exchange (NYSE) this week. Shares fell 20% on their first day of trading, finishing at $11.42 on Tuesday. This drop came despite Bitcoin itself making gains of around 3% on the same day.
The company’s shares debuted at $10.74, which is a stark contrast to the $14.27 closing price of Cantor Equity Partners, the special purpose acquisition company (SPAC) it merged with. Even in after-hours trading, where stocks saw a slight rebound, they climbed only 2.2% to close at $11.67, leading to a market capitalization hovering around $4 billion.
What sets Twenty One Capital apart from other crypto ventures is its substantial Bitcoin holdings. The company currently possesses 43,514 Bitcoins, valued at over $4 billion, ranking it as the third-largest public corporate Bitcoin holder, trailing only Marathon Digital Holdings (MARA) and Strategy.
Core to this venture is CEO Jack Mallers, well-known for his association with the Bitcoin platform Strike. Mallers emphasized that Twenty One is not merely a treasury company focused solely on accumulating Bitcoin; he envisions a broader scope that includes launching businesses in brokerage, credit, and lending.
Through its SPAC merger, the firm raised approximately $850 million via convertible notes and equity sales, with financial backing from major players including Tether, SoftBank, and Bitfinex. However, investors are seemingly concerned, as the company has not sufficiently detailed its operational plans or launch timelines, leading to apprehension on its debut.
Business Model Scrutinized
In the wake of the launch, the lack of clarity regarding its business model raised eyebrows among investors. While Mallers has reassured stakeholders that the company is building a diversified operating business, specifics are still forthcoming. He stated, “We are not a treasury company,” advocating for a more active engagement in developing Bitcoin products aimed at generating cash flow.
Mallers contrasts Twenty One with other market players, noting that Coinbase operates as a broader crypto business, while companies like Strategy focus solely on Bitcoin without producing revenue. He highlighted his goal of merging Bitcoin acquisition with income-generating initiatives to create a unique market position.
Context and Future Potential
The current market has seen a number of crypto treasury firms emerge, inspired by models that focus on buying and holding cryptocurrencies. Investor enthusiasm for these companies peaked in prior months as Bitcoin enjoyed a resurgence to its October highs. However, the cooling crypto market has adversely affected the stocks of companies linked to this sector.
Despite the initial setback, Mallers remains optimistic about his company’s future, asserting that the positive track record of himself and Tether would bolster Twenty One Capital’s attractiveness in the coming months. He stated, “We see Bitcoin as the forest through the trees,” focusing on Bitcoin as the primary route to delivering value to shareholders.
In a challenging landscape, Twenty One Capital aims not only to survive but thrive, blending Bitcoin holding with revenue-generating operations—a strategy that could redefine its narrative and attract investor interest as the company unveils its plans in the near future.
