What do fitness equipment manufacturers, biopharmaceutical companies, battery material producers, and other diverse companies have in common?
Of course, it's Bitcoin.
As BTC soared to unprecedented levels this month, at least 12 previously unrelated publicly listed companies announced plans to purchase Bitcoin (BTC) as a means to store idle cash—indeed, recently quite profitable. This is the path illuminated by Michael Saylor since 2020 when he began transforming his relatively obscure software manufacturer MicroStrategy into a Bitcoin treasury.
This has led MicroStrategy to achieve tremendous success in the U.S. stock market—since Saylor began purchasing Bitcoin for the company, its value has increased approximately 30 times, accumulating a massive reserve worth about $38 billion (as of the time of writing).
Since this month, the company's stock price has nearly doubled since Donald Trump promised to embrace cryptocurrency and was elected President of the United States. (Other crypto stocks have also seen increases. Exchange operator Coinbase has risen nearly 70% since the day before the election.)
Other companies are trying to replicate this success.
On Friday, a biotech company Anixa Biosciences (ANIX) stated that its board approved the purchase of a certain amount of Bitcoin to diversify the company's cash reserves. The stock briefly rose 19%, but closed up only 5%. Meanwhile, fitness equipment company Interactive Strength (TRNR) announced on Thursday that after its board approved the use of cryptocurrency as a treasury reserve asset, the company plans to purchase up to $5 million worth of Bitcoin. Following the announcement, the company's stock price soared over 80% at one point, but ended the day "only" up 11%.
Earlier this week, biopharmaceutical company Hoth Therapeutics (HOTH) announced a $1 million Bitcoin purchase plan, which spurred its stock price to rise by as much as 25%—although almost the entire gain was erased by the close. Similarly, companies including LQR House (LQR), Cosmos Health (COSM), Nano Labs (NA), Gaxos (GXAI), Solidion Technology (STI), and Genius Group (GNS) saw brief surges in stock prices after announcing Bitcoin vault plans in November. Only one company saw a decline after announcing this news: Acurx Pharma (ACXP).
"The recent Bitcoin frenzy, coupled with MicroStrategy's stock price increase of over 500% in 2024, has sparked a wave of companies (especially small caps) announcing Bitcoin purchase strategies," said Youwei Yang, chief economist at BIT Mining (BTCM).
Whether these companies emulating MicroStrategy will achieve the same success as Saylor remains uncertain.
Youwei Yang stated, "This behavior could end in the same way as [the previous bull market]: unsustainable hype followed by a significant correction as the market realizes that many of these announcements lack substance."
Additionally, whether the latest entrants can stick it out remains technically unknown. So far, the only company known to have genuinely purchased Bitcoin is the AI company Genius Group.
But who can blame them?
Early investors in MicroStrategy have made a fortune, and even recent investors can easily profit. Saylor primarily raised funds through issuing stocks and bonds, which were then used to purchase Bitcoin. These imitators may thus gain access to capital market channels they would not have otherwise.
The market follows the old adage "never fight the market," meaning to go with the flow regardless of fundamentals. Companies want to meet market demand, and no one wants to be the one to tell the boss and shareholders that underperformance resulted from not following in MicroStrategy's footsteps.
"Just a few years ago, buying Bitcoin was almost too risky. However, now the risks seem to be increasingly the opposite—failing to buy is the real risk," said Brian D. Evans, CEO and founder of BDE Ventures, adding, "Not being involved with Bitcoin is really painful."
For those filled with hope, this sudden corporate scramble may herald the long-awaited mainstream adoption of Bitcoin, especially in the context of President-elect Trump's expressed desire for the U.S. government to stockpile Bitcoin.
"For supporters of BTC, macro factors like expected inflation and new regulatory friendliness will encourage more companies to incorporate this asset into their balance sheets," said FRNT Financial, a crypto platform based in Toronto, in a report.
Furthermore, Bitcoin purchasing strategies can open capital markets for companies, as seen with MicroStrategy and mining company MARA Digital (MARA). Both companies have recently been able to raise funds through convertible bonds that do not pay interest to investors, meaning these investors are willing to forgo current income in exchange for the ability to eventually convert the debt into equity, thereby gaining exposure to Bitcoin.
BDE's Evans stated that announcing plans to buy Bitcoin "is a useful way for companies to raise capital, which is no different from what MicroStrategy has done in recent years."
However, to some, this sounds like a replay of a brief trend from the late 2010s, when many companies unrelated to cryptocurrency added the term "blockchain" to their names.
The most famous example is the obscure beverage manufacturer Long Island Iced Tea, which renamed itself Long Blockchain and initially achieved explosive results: its stock price almost doubled in a single day after the name change to a cryptocurrency. The gains did not last, and the stock was later delisted by NASDAQ. (Three individuals were charged with insider trading by the U.S. Securities and Exchange Commission.)
There are other "magic" buzzwords. During the 2021 cryptocurrency bull market, many large companies waved flags of "Web3," "metaverse," and "NFT" in an attempt to drive up stock prices. Even Facebook rebranded itself as Meta, fully betting on the metaverse. However, these moves ultimately led to massive losses.
Meanwhile, some companies with depressed stock prices and no connection to cryptocurrency have begun to venture into Bitcoin mining, which was then seen as a lucrative business. However, the subsequent brutal bear market brought these once-promising crypto concepts crashing down, making them "the mice that cross the street."
Youwei Yang stated that although MicroStrategy has been able to raise billions from capital markets to fund Bitcoin purchases, if others adopt this strategy as well, it could have adverse effects on smaller companies. "For small-cap stocks, it may be seen as a short-term gimmick, thereby deterring serious investors. If Bitcoin's price stabilizes or falls, the speculative appeal of these stocks may diminish, making these companies vulnerable to investor skepticism and regulatory scrutiny."
David Siemer, co-founder and CEO of Wave Digital Assets, expressed a similar view, saying, "While this approach may yield short-term gains in a bull market, it also carries significant risks. Unlike directly holding assets, leverage amplifies potential losses during market corrections, highlighting its inherent dangers," he noted, as some companies are taking advantage of the hype around Bitcoin to increase debt on their balance sheets.
Whoever is right, after Trump won the U.S. election, Bitcoin repeatedly set historical highs, and the magic remains: announce a Bitcoin plan similar to Saylor's and see if your stock can take off.
"We seem to have reached a point where many companies feel they must do this," said BDE founder Brian D. Evans.
In any case, welcome to the new cryptocurrency bull market.
