Written by: BitpushNews
As Trump prepares to take office around January 20, 2025, he continues to expand the new landscape of the cryptocurrency field.
According to the Financial Times, Donald Trump's social media company Trump Media & Technology Group is in deep negotiations to acquire the cryptocurrency trading platform Bakkt.
According to two individuals familiar with the negotiations, Trump Media will fully acquire Bakkt, with Trump promising to retain his 53% stake, although the valuation and financial terms have not been disclosed.
The news sent the stock prices of both companies soaring.
Trump Media, which holds a majority stake owned by Trump (NASDAQ stock code DJT), surged double digits just minutes after the report was published. The company operates the Truth Social application, closing up over 16%. Bakkt experienced several trading halts due to excessive volatility, closing up over 163%.
Mediocre performance, once on the verge of delisting
Bakkt was launched by the Intercontinental Exchange (ICE) in 2018 and went public in October 2021, primarily providing technology services for cryptocurrency investors. Before going public through a SPAC, Bakkt raised hundreds of millions from investors such as Boston Consulting Group, Galaxy Digital, ICE, and Microsoft’s M12 venture fund, but has struggled to achieve profitability. Its latest quarterly report indicated total revenue of $328.4 million, with an operating loss of $27.4 million, a 48% decrease in losses compared to the same period last year.
Trump has a unique relationship with Bakkt; former CEO Kelly Loeffler was a co-chair of Trump's inauguration committee.
Loeffler's husband is Intercontinental Exchange CEO Jeffrey Sprecher. In 2019, Georgia Governor Brian Kemp appointed Loeffler to fill the Senate seat left vacant by Senator Johnny Isakson, who resigned for health reasons. Loeffler subsequently stepped down from her executive position at Bakkt. However, in the runoff election for the Senate seat special election, Loeffler was defeated by Democratic Senator Raphael Warnock.
Bakkt previously indicated that its cryptocurrency custody business might be shut down, which had received regulatory approval from New York authorities. Those familiar with the TMTG negotiations indicated that this business would not be included in the deal. In the three months ending September 30, the custody business reported an operating loss of $27,000, with revenues of $328,000.
Due to poor stock performance, Bakkt faced the risk of delisting from the New York Stock Exchange until it conducted a 1 for 25 reverse stock split in April. Last week, its stock price rose by 15%.
Expanding cryptocurrency landscape, stock performance outweighs fundamentals
The Trump family's pace in entering the cryptocurrency market is accelerating. Their cryptocurrency project World Liberty Financial launched in September, along with several commitments related to digital assets made during his campaign (such as establishing a Bitcoin reserve, creating a mining-friendly environment, and replacing the SEC chairman), all demonstrate Trump's strong interest in the cryptocurrency industry.
This interest is directly reflected in the market. As Trump won the election, retail investors' expectations for the Republican Party, along with optimistic expectations for favorable cryptocurrency policies from the Trump administration, caused significant fluctuations in the stock price of Truth Social's parent company TMTG, amounting to billions of dollars in gains and losses leading up to the election. However, TMTG's revenue this year was only $2.6 million, with a net loss of $363 million, yet its equity valuation exceeds $7 billion.
The user base of Truth Social is also relatively small; according to Similarweb data, the average daily visits to the Truth Social website this month were 646,000, while the daily visits to Elon Musk's X platform were 155 million.