In a notable trend within the cryptocurrency industry, several companies with significant Bitcoin and digital asset holdings are implementing stock buyback programs. This strategy aims to enhance their market credibility and attract more investor interest, according to analysts in the space.
Thumzup, a media company with ties to Donald Trump Jr. that holds both Bitcoin (BTC) and Dogecoin (DOGE), announced an increase in its share buyback initiative from $1 million to a substantial $10 million. This announcement resulted in a 7% surge in its stock price (TZUP) during the trading session, with an additional after-hours rise of 0.82%, bringing the stock to a value of $4.91.
In parallel, DeFi Development Corp (DFDV), a treasury company associated with Solana, expanded its buyback program impressively from $1 million to $100 million, boosting its stock by over 5%. It concluded the trading day with a more than 2% gain, settling at $15.50 and picking up an additional 1% after hours.
This shift toward buyback strategies reflects changing dynamics in the cryptocurrency sector. A report from David Duong and Colin Basco of Coinbase suggests that publicly traded crypto companies are entering a competitive arena as they vie for investor attention and funds.
Ryan McMillin, the Chief Investment Officer at Merkle Tree Capital, comments on this development, stating that stock buybacks signal a new phase in the cryptocurrency treasury race—one defined by a quest for credibility. “It’s not sufficient anymore to merely claim ‘we hold Bitcoin.’ Investors are seeking evidence of professional capital management through buybacks, dividends, and well-defined treasury strategies,” he remarked.
McMillin further emphasized that integrating corporate finance strategies within the digital asset framework is key for these companies. “This blend communicates a desire to be evaluated not solely on their Bitcoin holdings but also on shareholder returns,” he added.
However, not every company that has announced stock buybacks has witnessed a positive market response. The TON Strategy Company, formerly known as Verb Technology Company, attempted a buyback on September 12, but its stock (TONX) dropped by 7.5%, highlighting the varying outcomes of such initiatives.
According to McMillin, share buybacks can act as a definitive signal of a company’s confidence in its valuation. In the crypto market, where stock valuations often correlate with Bitcoin prices, buybacks can help minimize the disparity between stock price and actual cryptocurrency holdings (mNAV). “By reducing the share float, these buybacks signify a commitment to discipline, which investors typically respond favorably to,” he explained.
Moreover, Kadan Stadelmann, Chief Technology Officer at Komodo Platform, shared insights on the implications of buybacks on share scarcity. He noted that with fewer outstanding shares available in the market, the resulting scarcity can exert upward pressure on stock prices. “The race among crypto treasury firms revolves around devising the most compelling treasury structure while simultaneously navigating the landscape of Bitcoin and traditional currencies,” he stated.
In a broader context, the cryptocurrency treasury trend is here to stay, as evidenced by Bitbo’s tracking of companies that have integrated Bitcoin into their balance sheets. Currently, these firms collectively hold over 1.4 million Bitcoin, which accounts for approximately 6.6% of the total supply. Notably, Michael Saylor’s company, Strategy, is leading the pack with an impressive 638,985 Bitcoin and continues to engage in regular purchases.
As the landscape evolves, analysts suggest the market may be approaching saturation, with questions surrounding the long-term viability of all crypto-buying companies. Despite this uncertainty, Stadelmann remains optimistic about the ongoing significance of corporate allocations of digital assets.
