The SPAC frenzy on Wall Street has swept into the cryptocurrency space.

Written by: Yueqi Yang

Translated by: Block unicorn

According to insiders, David Bailey, who provided cryptocurrency policy advice to President Donald Trump during the 2024 campaign, is raising $300 million to launch a publicly traded Bitcoin investment company. He is following a series of companies that have purchased cryptocurrencies, attempting to replicate the success of Michael Saylor's Strategy, which has transformed into a Bitcoin investment company.

Bailey has raised $200 million through a private placement of new shares and issued $100 million in convertible bonds for a small publicly listed company. The name of the company has not been disclosed. Insiders say that this funding will be used to purchase Bitcoin.

Bailey is the CEO of BTC Inc., which owns Bitcoin Magazine, the Bitcoin Conference, and UTXO Management, a cryptocurrency investment company. Insiders say that BTC Inc. will eventually merge with this shell company listed on Nasdaq. According to one of the sources, the company will be renamed Nakamoto, in honor of Bitcoin's anonymous creator, Satoshi Nakamoto.

Trump delivered a significant cryptocurrency speech at the Bitcoin Conference in Nashville last July. Bailey stated that he and his team worked with Trump's campaign team to develop cryptocurrency policy and assist with fundraising.

Bailey's deal could be announced as early as next week, coinciding with a frenzy among investors for publicly listed cryptocurrency acquisition companies, which is the latest trend in the cryptocurrency market. This complex deal provides a fast track for cryptocurrency to enter the public market.

Strategy (formerly known as MicroStrategy) began purchasing Bitcoin in the summer of 2020, becoming the world's largest corporate holder of Bitcoin and pioneering this model. Its stock price subsequently soared by 3100%, trading at twice the value of its held Bitcoin, which is worth $54 billion.

This has sparked a rush of companies eager to launch imitators. Last month, Japanese tech conglomerate SoftBank and stablecoin issuer Tether announced the launch of Twenty One, a $3.6 billion Bitcoin investment company, through a merger with a special purpose acquisition company created with Cantor Fitzgerald. Two other companies—Nasdaq-listed real estate platform Janover and consumer goods company Upexi—have transformed into Solana token investment companies. Since their announcements, the stock prices of these companies have surged.

These stocks are popular with investors because they provide a simple way to gain exposure to cryptocurrencies without the hassle of holding tokens. Many companies are issuing debt to fund cryptocurrency purchases, effectively leveraging to amplify returns. Their fundraising scale means they are now competing with cryptocurrency hedge funds for institutional capital.

"This is becoming a very big trend. It's almost like the Wall Street SPAC frenzy has swept into the cryptocurrency space," said podcast host and cryptocurrency angel investor Frank Chaparro, who has invested in Upexi. He noted that one reason these stocks are attractive is that cryptocurrency companies holding these stocks can more easily obtain financing, as they can use their stock holdings as collateral to secure funding from banks or traditional major brokers, which do not accept cryptocurrencies as collateral.

However, these stocks also carry risks. If Bitcoin prices fall, their declines could be even greater due to leverage. If debt matures and refinancing is not possible, these companies may be forced to sell their held Bitcoin or cryptocurrencies to repay the debt.

Pantera Capital, led by former Tiger Management executive Dan Morehead, is one of the cryptocurrency funds betting on such companies. According to Pantera's general partner Cosmo Jiang, the fund recently made an "eight-figure investment" in the private placement of Twenty One Capital. "We are optimistic because we believe these are novel companies, and the equity market clearly has strong demand for them," he said.

Stocks like Strategy gain additional momentum when trading at prices above their underlying assets. This means that when they issue shares, they can buy more Bitcoin for every dollar raised. Cosmo Jiang stated, "These stocks can trade at a premium because they can increase the Bitcoin per share over time."

The reverse is also true. Matthew Sigel, head of digital asset research at VanEck, stated, "If they trade below their Bitcoin value, then the business model may be in trouble. They cannot issue shares at market prices to buy Bitcoin anymore." He added, "They are somewhat like operating a hedge fund within a public company."

VanEck and Bitwise are two asset management companies that issue Bitcoin exchange-traded funds (ETFs) and are also embracing such investment companies, launching new ETFs that will invest in a basket of stocks holding cryptocurrencies as part of their financial strategy.

Trump promised during his Nashville speech to make the U.S. the "global cryptocurrency capital" and establish a national strategic Bitcoin reserve. He stated that cryptocurrency regulations would be more favorable to the industry.

The cryptocurrency industry is a major donor to Trump's campaign. Trump and his family have profited from selling meme coins and establishing a stablecoin, which was used by a Middle Eastern sovereign wealth fund for a $2 billion investment, causing a stir in Congress.

Upexi CEO Allen Marshall stated that his company originally engaged in consumer brand business but decided this year to pivot towards purchasing Solana, as the friendly regulatory environment under the Trump administration eliminated the risk of Solana tokens being classified as unregistered securities by the SEC. He said, "This was the final factor driving us in this direction. The new government cleared this area, allowing you to participate in Solana and other cryptocurrency assets without violating securities regulations."

For example, Freight Technologies, a logistics company facilitating trade between the U.S. and Mexico, announced last week that it would raise up to $20 million to purchase Trump meme coins, following Trump's announcement that he would invite the largest holders of his meme coins to dinner later this month. The company's CEO, Javier Selgas, stated in a press release that his company is purchasing these tokens because he hopes to advocate for "fair, balanced, and free trade between the U.S. and Mexico."

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