21 Capital’s MicroStrategy Imitation Could Fail

Welcome to the US Crypto News Morning Briefing—your essential rundown of the most important developments in crypto for the day ahead. Grab a coffee to understand why the share price of Cantor Equity Partners Inc. (CEP) is seeing downside pressure while the share price of Strategy’s stock (MSTR) is increasing. CEP is the company behind 21 Capital, a newly established firm imitating Strategy’s Bitcoin model. Crypto News of the Day: Max Keiser Issues 21 Capital Warning as CEP Shares Sink Twenty One Capital’s ambitions to become the next major corporate Bitcoin player are under fire. The share price of its holding company, Cantor Equity Partners Inc., is bearing the brunt of overhead pressure. The CEP stock price is down by over 6% in the last five trading days. Meanwhile, the share price of its market rival, Strategy (formerly MicroStrategy), is up by over 7%. It comes barely three weeks after CEP’s Twenty One Capital launched, following a $3 billion investment from Tether, Softbank, Bitfinex, and Cantor Fitzgerald. Headed by James Mallers, Twenty One Capital presented as Strategy’s inadvertent market rival, or peer. It introduced BTC-native metrics like Bitcoin Per Share (BPS), effectively challenging Strategy’s model, where investors have indirect exposure to Bitcoin through MSTR stock. In a recent US Crypto News publication, Bitcoin pioneer Max Keiser said institutions must “Saylorize” or die. Nevertheless, despite Twenty One Capital extending the “Saylorization” trend, the CEP stock price continues to endure downward pressure while Strategy’s stock price is gaining. Against this backdrop, investors hoped that hype around Cantor Equity Partners Inc.’s planned SPAC merger could reverse the trend, but this appears to be false hope. Notably, the merger would see CEP stock listed under the new ticker XXI. “Cantor Equity Partners (CEP) announced a merger with bitcoin treasury company Twenty One Capital in a $3.6 billion merger,” reports indicated. The announcement propelled shares of the SPAC vehicle, Cantor Equity Partners (CEP), sharply higher, but now momentum is fading. Investors who hoped for a post-merger rally have watched the stock drift downward toward the mid-$20s over the past five days. BeInCrypto contacted Max Keiser for insights into why this is happening, with the Bitcoin maxi blaming it on Twenty One Capital’s model mimicking Strategy. Mimicking Strategy Could Be Detrimental, Max Keiser Says According to Max Keiser, Twenty One Capital’s attempt to mimic Strategy could prove far riskier and less effective. “There’s a big difference between a company with a Bitcoin treasury strategy and a Bitcoin strategy company,” Keiser told BeInCrypto. Keiser says Strategy is leveraging its heft as a company with lots of Bitcoin, harnessing volatility to buy more BTC. However, Cantor Equity Partners Inc. or Twenty One Capital does not meet that standard. “CEP is a company that is looking to buy lots of Bitcoin, which is very volatile. I question if they can effectively harness that volatility like Strategy does,” he added. Twenty One Capital is the third-largest corporate Bitcoin holder after Strategy and Bitcoin mining firm MARA Holdings. Data on Bitcoin Treasuries shows Strategy holds 568,840 BTC, while MARA holds 48,237 Bitcoin tokens. Meanwhile, after Tether acquired 4,812.2 Bitcoin (now held in an escrow wallet as Twenty One Capital prepares to complete a SPAC merger with Cantor Equity Partners), Twenty One Capital holds 36,312 Bitcoin tokens. In the interview with BeInCrypto, Keiser articulated that trying to copy Strategy’s model without the infrastructure, discipline, or scale puts 21 Capital in a precarious position. “A Bitcoin strategy company is inherently riskier, with no clear path to be as competitive as Strategy in leveraging market volatility to capture more Bitcoin,” he stated. Further, despite the surge in interest from investors hoping to jump on what appeared to be the “next big BTC play, Keiser believes the long-term winner is already clear. “Ultimately, the big winner will continue to be Strategy, with dozens of knock-offs trying to catch them, failing to generate the same returns, but increasing demand for Bitcoin substantially. That ends up benefiting STRATEGY proportionately more than the knock-offs, with less risk,” he concluded. This aligns with a sentiment from Steven Lubka, the Head of Swan Private Wealth. As BeInCrypto noted in one of the US Crypto News publications, Lubka said the inadvertent competition between Twenty One Capital and Strategy will ultimately bode well for Strategy. “Ironically, someone throwing the gauntlet at Microstrategy, ‘we want to become the most successful company in Bitcoin, ‘ Only makes Microstrategy more valuable,” Lubka remarked. Charts of the Day This chart shows Strategy Inc.’s stock price rose by $28.61 or 7.28% over the past five days, closing at $421.61 on May 14. This chart shows a 5-day decline in Cantor Equity Partners Inc.’s stock price, down by 6.22% since May 7. CEP closed at $29.84 on Tuesday and is attempting a slight pre-market recovery. Byte-Sized Alpha Here’s a summary of more US crypto news to follow today: Crypto Equities Pre-Market Overview Disclaimer In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated. Source: https://beincrypto.com/twenty-one-capital-microstrategy-warning-us-crypto-news/