Metaplanet and DeFi Technologies: public companies buy more Bitcoin
Since the US software company MicroStrategy became a success story with its Bitcoin strategy, there have been an increasing number of imitators. On Sunday, Blocktrainer.de already reported on smaller companies that have announced in recent weeks that they are now aggressively focusing on Bitcoin.
There is now more news in this regard at the start of the week: the Japanese public limited company Metaplanet has bought Bitcoin and DeFi Technologies from Canada announced that it has introduced Bitcoin as a primary reserve asset on its balance sheet and invested several million US dollars.
Metaplanet buys Bitcoin for 1.6 million dollars
Metaplanet, a small public limited company from Japan, announced today that it has purchased a further 23.35 Bitcoin worth almost 1.6 million US dollars. The directors already authorized this purchase at the end of May.
*Metaplanet purchases additional 23.35 $BTC* pic.twitter.com/Wj5AZjVNvq-
Metaplanet Inc (@Metaplanet_JP) June 11, 2024
This means that the company, which now holds 90 million US dollars, now holds a total of just over 114 BTC, which corresponds to around 7.65 million US dollars at the current price.
The capital markets responded positively to the news of the further Bitcoin purchase and Metaplanet's share price rose by almost 10% over the course of the day, although Bitcoin was weaker today.
DeFi Technologies relies on Bitcoin strategy
DeFi Technologies, a listed company from Canada, announced yesterday that it is now also focusing on a Bitcoin strategy. The approximately USD 450 million public company is active in the crypto sector as a venture capitalist and issues exchange-traded funds, among other things.
In a recent press release, the crypto and Web3 company announced that it had purchased 110 Bitcoin worth the equivalent of 7.4 million US dollars and is now strategically focusing on the asset.
DeFi Technologies has adopted Bitcoin as a primary reserve asset for the company's balance sheet and purchased 110 Bitcoin to initiate this strategy. This reflects our confidence in Bitcoin as a hedge against demonetization and the potential to expand the company's balance sheet.
From the press release
As part of the announcement, DeFi Technologies also elaborates on why the public company chose Bitcoin.
Bitcoin is now a major asset class with a market value of over 1 trillion dollars. DeFi Technologies believes that Bitcoin, as a scarce and finite asset, has unique characteristics that make it a meaningful hedge against inflation and a safe haven from demonetization. Furthermore, its digital and architectural resilience makes it a preferable alternative to traditional assets. Given the significant value differential between Bitcoin and other traditional assets, DeFi Technologies believes Bitcoin has the potential to generate above-average returns as it gains adoption.
From the press release
Interestingly, this wording is quite close to that used in the announcement of the Bitcoin strategy by US healthcare company Semler Scientific - only the comparison specifically with the precious metal gold has been replaced here by that with traditional assets. This supports the thesis that the increasing focus of stock corporations on Bitcoin will not go unnoticed and will certainly encourage imitation due to the positive market reactions.
As with Semler Scientific, the DeFi Technologies share also reacted to the news with a price rocket. On yesterday's trading day, the stock market value of DeFi Technologies increased by 25 percent.
Other companies could follow
Since any company that currently announces that it is pursuing a Bitcoin strategy can gain significantly in market value, the signaling effect should not be underestimated. Other companies will be watching this closely and wondering what is stopping them from doing the same to Metaplanet, Semler Scientific and DeFi Technologies.
Accordingly, many more public companies could follow suit, using Bitcoin as a tool to gain attention - an important currency in the world of public companies.
However, investors need to take this with a grain of salt. It is quite conceivable that companies may simply want to generate a brief hype around the share with such an announcement in order to be better able to issue new shares to line their own pockets. Even a higher trading volume of the share can be an advantage.
A direct investment in the asset is probably the safest strategy for betting on a broader adoption of Bitcoin - including at company level. In contrast to a Bitcoin purchase, there is always the risk that the management has fraudulent intentions or makes fatal mistakes when buying shares.
It will be interesting to see whether other small companies will follow suit. Although these reports currently have little impact on the price of Bitcoin, if at some point hundreds of small public limited companies invest a few million US dollars in Bitcoin, this will create a potentially strong price-driving demand.
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