Companies are increasingly turning to cryptocurrency purchases as a means to significantly boost their stock prices, with recent developments illustrating this trend. A notable example is Eightco Holdings, which saw its stock surge dramatically this week after announcing plans to acquire a substantial amount of Worldcoin, a cryptocurrency associated with the Sam Altman venture that utilizes retinal scanning technology. Initially experiencing a remarkable increase of up to 5,600%, the stock eventually stabilized to a still-impressive 3,000% rise.
In another instance, Caliber Companies, an asset management firm predominantly focused on commercial real estate, experienced a stock increase of as much as 2,132% after revealing its initial purchase of Chainlink tokens. Shares climbed to an intraday high of $48 before settling at around $12, following the company’s commitment to a series of ongoing cryptocurrency acquisitions.
The emergence of crypto treasuries—companies that finance their operations through debt or equity and invest heavily in digital currencies—has gained traction among firms looking to replicate the successful strategy of prominent figures like Michael Saylor. This approach has unlocked opportunities for numerous smaller, lesser-known companies to spark dramatic rallies in their stock prices by announcing crypto investment plans.
Investors who remain committed amidst this volatility have reaped substantial rewards, although some analysts caution that these trends echo behaviors seen in later stages of market cycles. Earlier this year, BitMine Immersion, a cryptocurrency mining entity, raised $250 million to invest in Ethereum as part of its treasury strategy, prompting a subsequent 2,954% increase in its stock price over just four trading days.
Many of these companies were initially trading at nearly penny stock levels prior to their pivots towards cryptocurrency. The immense hype surrounding digital assets, fueled by a more accommodating regulatory environment and expectations of favorable monetary policy shifts from the Federal Reserve, has contributed to these extraordinary stock movements.
Companies looking to capitalize on the crypto boom owe a degree of credit to Saylor’s firm, which has attracted significant investor interest towards crypto treasury strategies. The firm now holds approximately 638,460 bitcoins—accounting for about 3% of all bitcoins in circulation—making it the largest corporate holder in this space. Since its initial bitcoin purchase in 2020, Saylor’s stock has appreciated by 2,300%, inspiring over 150 public companies to adopt similar investment strategies.
However, the trend raises concerns among some market watchers about speculative behavior. Critics point to the curious phenomenon where companies with substantial bitcoin investments sometimes achieve stock valuations that exceed the value of the underlying assets. For instance, Saylor’s firm commands around $71 billion in bitcoin assets while its market capitalization is approximately $93 billion.
This discrepancy has made the strategy of going long on bitcoin while shorting Saylor’s firm an enticing trade for hedge funds. Notable short-seller Jim Chanos has been particularly critical of the crypto treasury model, emphasizing the inconsistency between the stock price and the value of the underlying bitcoin. He has described the current situation as “ridiculous,” asserting that it simply represents the raising of capital to acquire a financial asset without any unique offering.
