Twenty One plunges 25% on its first day of listing! $3.9 billion Bitcoin holdings severely undervalued

Twenty One Capital Inc. saw its stock price plummet 25% on its first day of trading via a SPAC merger on December 9. The opening price of $10.74 was far below Cantor Equity Partners’ closing price of $14.27. This Bitcoin treasury company, founded by Tether, SoftBank Group, and others, holds approximately $3.9 billion worth of Bitcoin.

Why the Zero Premium Strategy Failed

(Source: Trading View)

Twenty One’s biggest difference from other Bitcoin treasury companies lies in its valuation logic. Michael Saylor’s MicroStrategy (MSTR) trades at a premium of up to 2 to 3 times its net asset value (NAV). Investors are willing to pay this premium because they believe Saylor can continually increase the “Bitcoin per share” metric. In contrast, Twenty One deliberately adopts a zero premium or even discount strategy, attempting to attract investors with “cost-effectiveness.”

In an interview with Bloomberg in April, Mallers said: “Our government bonds do not trade above their net asset value. Therefore, we believe this is a very attractive tool for those seeking Bitcoin exposure, and we think it could be, if not the ultimate winner in this trend, at least one of them.” However, the market didn’t buy it. The 25% drop on the first day shows that investors would rather pay a premium for MicroStrategy than buy Twenty One at a discount.

This market reaction reveals a harsh reality: in the Bitcoin treasury company space, investors are not buying Bitcoin itself (they can buy ETFs directly), but rather the company’s ability to continually accumulate Bitcoin and the credibility of its executive team. MicroStrategy has proven it can keep buying Bitcoin in any market environment, while Twenty One, as a newcomer, has yet to establish this trust. The zero premium strategy may make sense logically, but in practice, it cannot bridge the trust gap.

Another non-SPAC Bitcoin treasury company, ProCap Financial Inc., also saw its stock price drop 14% on its first trading day Monday. This year, digital asset management companies have experienced a significant decline due to falling token prices, increased competition, and shrinking premiums. This overall weakness highlights the systemic challenges faced by Bitcoin company IPOs.

Star-Studded Shareholder Roster and $3.9 Billion in Holdings

Twenty One was co-founded by an affiliate of Cantor Fitzgerald LP, stablecoin issuer Tether Holdings SA, and SoftBank Group. Brandon Lutnick, Chairman of Cantor Fitzgerald (son of U.S. Secretary of Commerce Howard Lutnick), serves as CEO of Cantor Equity Partners. According to statements, Twenty One will be controlled by Tether and Bitfinex, with SoftBank holding a significant minority stake.

This shareholder lineup is extremely rare in the crypto industry. Cantor Fitzgerald is a traditional Wall Street financial giant and currently the main custodian of the billions of dollars in U.S. Treasury bonds held by Tether. Tether, as the world’s largest stablecoin issuer, has a market cap of over $140 billion and extensive experience in the crypto market. SoftBank is a top global tech investment firm, having invested in star companies like Alibaba and Uber.

The Three Core Shareholders of Twenty One and Their Strategic Value

Cantor Fitzgerald: Provides compliance and Wall Street connections from traditional finance, paving the way for Twenty One’s fundraising and institutional sales

Tether: Brings operational experience in stablecoins and crypto exchanges, potentially integrating USDT settlement functions in the future

SoftBank Group: Endorsement from a top global VC enhances brand value and could introduce its portfolio companies as clients

Twenty One holds about $3.9 billion in Bitcoin, ranking it among the top Bitcoin treasury companies. MicroStrategy holds about $48 billion, Marathon Digital about $1.5 billion, making Twenty One’s $3.9 billion a leader in the second tier. However, its Bitcoin holdings have not translated into stock price support, highlighting the complexity of valuing Bitcoin treasury companies.

Jack Mallers’ Lightning Network Differentiation Strategy

Strike founder and CEO Jack Mallers serves as CEO of Twenty One Capital, which is the company’s biggest difference from other Bitcoin treasury firms. Mallers is a staunch supporter of the Bitcoin Lightning Network. Strike, a digital payments provider based on the Lightning Network, has helped promote Bitcoin as a legal tender payment infrastructure in countries like El Salvador.

Twenty One’s business model is not just to hold Bitcoin; it also plans to focus on building financial infrastructure for the cryptocurrency, as well as creating media and educational resources around Bitcoin. This positioning attempts to shift the company from a simple “Bitcoin hoarder” to a “Bitcoin ecosystem builder.” The low fees and instant settlement features of the Lightning Network make it an ideal solution for micropayments and cross-border remittances.

However, the market seems unconvinced of the value of this differentiation strategy. The 25% drop on the first day shows investors care more about how much Bitcoin the company holds and at what cost it raises funds to buy Bitcoin, rather than its long-term vision for ecosystem development. This reflects the current short-term thinking of Bitcoin company investors: they want immediately visible growth in “Bitcoin per share,” not infrastructure investments that may take years to deliver value.

A Fatal Error in Timing the IPO

The company chose to go public at a time when the cryptocurrency industry is facing headwinds. Bitcoin’s price has fallen more than 28% from its earlier peak this year, dropping from around $126,000 to about $90,000. Crypto IPOs have also delivered mixed results, with another non-SPAC Bitcoin treasury company, ProCap Financial Inc., dropping 14% on its first trading day Monday.

The Cantor Equity and Twenty One merger involved a private investment in public equity, including $486.5 million in senior convertible notes and about $365 million in common stock. Cantor Fitzgerald served as placement agent for the deal. Such complex financing structures are common in SPAC deals, but the presence of senior convertible notes means the company bears a significant debt burden, which amplifies risk when Bitcoin prices fall.

Technically, Twenty One saw relatively low trading volume on its first NYSE trading day, indicating limited institutional participation. Against the backdrop of weak Bitcoin prices and shrinking premiums for leaders like MicroStrategy, newcomers face the dual challenge of “proving their model works and convincing the market why to choose them over MicroStrategy.” Twenty One’s first-day performance shows that this challenge is far tougher than expected.