Tether Just Put Nearly Half a Billion Dollars into Bitcoin

According to a filing with the US Securities and Exchange Commission on May 13, Tether bought 4,812 BTC at an average price of $95,319 each on May 9.

A major stablecoin issuer just put nearly half a billion dollars into Bitcoin (BTC).

According to a filing with the U.S. Securities and Exchange Commission on May 13, Tether bought 4,812 BTC at an average price of $95,319 each on May 9. That adds nearly $460 million of Bitcoin to a special escrow wallet tied to Twenty One Capital.

The firm, which is backed by Tether and aiming for a SPAC merger with Cantor Equity Partners, is collecting a large Bitcoin stash.

Tether’s Bold Bitcoin Move

Tether isn’t just minting tokens or lending them out. It’s taking on direct price risk. By placing almost $460 million into Twenty One’s Bitcoin stash, the stablecoin issuer steps into the realm of corporate holders like Strategy (formerly MicroStrategy) or BMO-backed miner Marathon Digital.

This purchase boosts Twenty One’s total to 36,312 BTC. Cantor Equity Partners holds 31,500 BTC on Twenty One’s behalf, and the rest came straight from Tether’s reserve play.

Those interested in following the volatile share price movements can do so under the ticker XXI, which is used for Twenty One’s future shares once its SPAC deal closes.

The CEO, Jack Mallers, says they have applied for regulatory approval and are awaiting it. He didn’t name a timeframe for the SPAC closing but said it’s still in progress.

Investors have already seen wild swings. XXI shares jumped from $10.65 to $59.73 on May 2 after disclosing a large capital raise. They slid back to $29.84, and climbed another 5.2% in after-hours trading on May 11 following this latest buy.

Big Backers Onboard

Tether isn’t the only big name funding Twenty One. SoftBank has pledged $900 million, and Bitfinex will convert about 7,000 BTC into equity at $10 per share. Cantor Fitzgerald is leading the SPAC, aiming to raise $585 million to fund more Bitcoin buys.

Those names lend weight, but each partner brings its own risks. Cantor faces difficulties lending out its own Bitcoin holdings due to regulatory constraints. If they want to buy more BTC despite limited lending opportunities, they’ll need to find creative solutions.

Meanwhile, Bitfinex is converting its crypto into equity, showcasing a shifting strategy. As for SoftBank, its involvement highlights the broader interest in Bitcoin among venture capital firms.

Climbing Toward The Top

With 36,312 BTC in its treasury, Twenty One Capital will rank as the third-largest corporate Bitcoin holder.

Here’s a breakdown of the top five:

* Strategy (formerly MicroStrategy) leads with 568,840 BTC.

* BMO-backed miner Marathon Digital comes second with 48,237 BTC.

* Twenty One is now chasing that third spot.

* Finally, Trust Node and Yale University follow closely with 40,000 BTC each.

Investors are watching to see if Twenty One will succeed in squeezing into the top three.

The firm’s pitch to investors is focused on maximizing Bitcoin per share. According to its SEC presentation, profit isn’t a priority. Instead, every dollar raised will be used to buy more BTC. This contrasts with most public companies, which measure success by earnings per share. For Twenty One, a rise in BTC holdings is the goal.

What’s Next For Investors

The SPAC route still has hurdles. Reports from last year disclosed that SEC reviews can take up to six months, and investors will be watching for any changes in capital-raise terms or difficulties encountered by Cantor in lending out its Bitcoin holdings.

If Bitcoin surges, Twenty One’s shares could soar. But if it dips, there’s no operating profit to soften the blow. For those who want straight Bitcoin bets, this may look attractive. But anyone craving steady returns from fees or services might look elsewhere.

In the coming weeks, market watchers will track both the SEC’s green light and how Twenty One manages its expanding Bitcoin stash. The answer will shape whether stablecoin issuers become big new players in the Bitcoin game or face difficulties navigating the complexities of the traditional financial system.