On its first day of trading on the New York Stock Exchange, Tether-backed Bitcoin vault company Twenty One Capital saw its stock price plummet by about 20%, facing market sell-offs at the opening as investors expressed doubts about its valuation and clear business path. The company holds approximately 43,500 Bitcoins (BTC) in reserves, but since Bitcoin peaked at around $126,000 in October, it has fallen over 25%, putting pressure on the "digital asset vault" model centered around crypto assets, leading to a cooling of investor sentiment.
This article outlines the market environment, company valuation structure, and future risks behind Twenty One's first-day plunge.
Twenty One Capital is a "Bitcoin vault company" with Bitcoin as its core asset, aiming to provide investors with regulated exposure to Bitcoin through long-term holdings of large amounts of Bitcoin. The company is supported by Tether, Bitfinex, and SoftBank Group, and is led by CEO Jack Mallers, the founder of Strike.
Twenty One officially debuted on the New York Stock Exchange this Tuesday through a merger with SPAC Cantor Equity. Based on its Bitcoin holdings, the company is now the third-largest publicly traded Bitcoin holder globally, after Strategy and MARA.
Unlike traditional companies that rely on cash flow or core business operations, Twenty One's core value almost entirely derives from its Bitcoin positions, introducing metrics such as "Bitcoin per share" (BPS) and "Bitcoin return rate" (BRR) in an attempt to directly link equity value to Bitcoin reserves.
The pressure on Twenty One's stock price on its first day was not coincidental but rather the result of multiple factors.
First, the overall sentiment in the crypto sector has been low, impacting valuations. With Bitcoin's price dropping over 25% from its October peak, the valuations of crypto asset stocks have come under pressure, and the premium on the so-called "Digital Asset Treasury (DAT)" model has significantly shrunk. Investors have shifted from chasing sharply rising target prices to seeking clearer profit models.
Second, Twenty One's business model is not sufficiently clear. Although the company holds 43,500 Bitcoins, CEO Jack Mallers has repeatedly emphasized in public that "the company is not simply a financial firm." Future plans include developing Bitcoin-related brokerage and lending services, but specific timelines, revenue sources, and profit paths have not been clearly disclosed.
Third, the valuation structure has raised market skepticism. Twenty One's holdings primarily come from related party injections and PIPE financing, rather than traditional market accumulation, which somewhat reduces transparency and capital efficiency, leading the market to apply significant asset discounts.
Despite this, Twenty One has strong channel relationships in the cryptocurrency industry and the broader financial sector. First, the company was formed through a merger with Cantor Equity, a special purpose acquisition company (SPAC) supported by investment bank and brokerage firm Cantor Fitzgerald, whose chairman Brandon Lutnick is the son of U.S. Secretary of Commerce Howard Lutnick. Second, Tether, the company behind the stablecoin USDT, holds over 50% of the company, while one of the world's largest investment holding companies, SoftBank Group, also holds a significant minority stake.
The company's CEO, Jack Mallers, is only 31 years old but has been involved with Bitcoin since he was 16. Before becoming CEO, he founded Zap, the parent company of Strike, which allows users to send and receive payments via the Bitcoin Lightning Network.
In fact, it's not just Twenty One; other once-dominant Bitcoin vault companies are also facing similar pressures due to the significant drop in cryptocurrency prices.
Affected by macroeconomic factors and market concerns over the slowing pace of interest rate cuts by the U.S. Federal Reserve, Bitcoin's price has fallen about 27% since reaching a historic high of $126,000 in October. Now, those companies that raised funds to purchase Bitcoins priced over $100,000—believing that Bitcoin prices would never drop below six figures—are facing substantial unrealized losses, while their equity premiums have also evaporated.
According to data from Galaxy Research, the Bitcoin vault company Metaplanet, which transformed from a Japanese hotel operator, has seen its unrealized profits drop from over $600 million in early October to about $530 million in unrealized losses as of December 1. Other companies holding large amounts of Bitcoin, such as Trump Media and Technology Group, GD Culture Group, and Empery Digital, are also facing tens of millions of dollars in unrealized losses, with their stock prices plummeting.
The sharp decline in Twenty One Capital's stock price on its first day, along with the pressures faced by other Bitcoin vault companies, reflects the high volatility and valuation risks in the crypto asset investment market. Despite having substantial Bitcoin reserves and strong investment backing, the market remains cautious about the uncertainty of future profit models and the innovative metrics that directly link equity to Bitcoin prices.
For the industry, this serves as a warning: while innovation and capital support are important, long-term sustainable development still requires a clear and sustainable profit path and transparent operational mechanisms. Otherwise, even highly regarded "star companies" may face harsh realities from the market on their first day of trading.
Related: A survey found that 60% of wealthy individuals in Asia plan to increase their cryptocurrency purchases.
Original article: “Digital Asset Vaults No Longer Shine: Twenty One's Stock Price Plummets 20% on IPO Day”
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