NYDIG: Untapped Equity Could Propel Bitcoin Prices to New Heights

Recent NYDIG research indicates that bitcoin treasury companies hold substantial ‘dry powder’ in untapped equity, which could lead to significant price gains for bitcoin. If such firms leverage their valuations to buy more BTC, prices could rise by $42,000, potentially reaching $138,000. The launch of Twenty One, a dedicated bitcoin acquisition vehicle, adds urgency to this development, highlighting a new trend among institutional investors.

In a recent analysis, NYDIG’s Greg Cipolaro reveals that many bitcoin treasury companies are sitting on significant capital, often referred to as “dry powder.” This untapped potential, primarily through equity issuance capacity, could have a notable impact on bitcoin’s market price. If these companies decide to leverage their current elevated stock valuations to acquire more bitcoin, a substantial price increase could be on the horizon.

Cipolaro employs a simple model, using a 10x “money multiplier” principle, which reflects how past capital inflows have typically affected bitcoin’s market cap. His findings suggest that if this capital injection occurs, the price of bitcoin could rise by as much as $42,000, marking nearly a 44% increase from the current price hovering around $96,000.

The urgency of this market situation has been heightened by the introduction of Twenty One, a new bitcoin accumulation vehicle backed by key players like Tether, Bitfinex, and Cantor Fitzgerald. Unlike other companies that integrate bitcoin into broader portfolios, Twenty One’s sole focus is to acquire and hold bitcoin, already possessing a significant amount of BTC.

Notably, Cantor Equity Partners, Twenty One’s SPAC partner, has seen impressive performance, beating the S&P 500 by over 347% since the announcement of their partnership. This demonstrates the potential benefits of targeted bitcoin investments.

Currently, 69 public companies collectively hold bitcoin valued at around $69.6 billion. Cipolaro’s research indicates that due to these companies’ inflated stock premiums relative to net asset value, there’s a possibility for further bitcoin purchases. This could create a positive feedback loop where the act of equity issuance translates into increased BTC buying, which in turn enhances both the value of the bitcoin and the market performance of these companies.

As Cipolaro puts it, the implications are quite clear: this existing “dry powder,” if unleashed, could substantially boost bitcoin’s pricing. Regardless of whether these firms act, there’s evident growing institutional interest in bitcoin. The emergence of bitcoin-oriented stocks suggests that capital markets are increasingly viewing bitcoin exposure as a balance sheet strategy, rather than merely relying on ETF flows for investment in the cryptocurrency.