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Investing.com - The amount of Bitcoin owned by companies specializing in accruing more of the cryptocurrency is anticipated to rise, according to analysts at Cantor.
Many firms have recently embarked on Bitcoin buying sprees, as part of a bid to capitalize on the digital coin’s soaring value and hopes for a softer regulatory backdrop.
In a note, the analysts led by Brett Knoblauch said these so-called "Bitcoin treasury companies," such as {{16678|MicroStrategy (NASDAQ:MSTR)}}, {{940830|Marathon Digital Holdings (NASDAQ:MARA)}}, and {{1122391|CleanSpark (NASDAQ:CLSK)}}, own or have raised capital acquire roughly 904,000 of the digital tokens. "[W]e expect that number to only continue to increase given the capital market advantages these companies have," they argued.
They added that "if feels like a new Bitcoin treasury play is emerging every day," fueled by a range of factors, including retail investor enthusiasm, the relative ease of buying stocks compared to cryptocurrencies, and fewer punitive tax rules equities than on digital assets.
"Financial engineering" is also seen allowing Bitcoin treasury companies to continuously grow their Bitcoin positions in the future, the analysts predicted.
The trend comes as firms are trying to emulate the success of Strategy, the software group formerly known as MicroStrategy, which began building up its Bitcoin stockpile in 2020 and now owns more than $63 billion worth of the world’s largest cryptocurrency. Investors have seemingly celebrated the move, with Strategy’s stock up by 3,000% since 2020, mirroring a surge in Bitcoin to recent all-time highs.
Last week, twenty new public firms announced crypto purchases, the Cantor analysts noted. But "not all Bitcoin treasury companies are created equal" and "some offer better risk/reward than others," they flagged.
Perhaps most importantly, these companies need to be able to rake in capital, as this will help facilitate further Bitcoin purchases, the analysts said.
"The amount of capital a company has access to in this space is largely driven by trading liquidity. For shares to have a relatively high amount of volume, we believe they need to have a management team that carries weight in the crypto ecosystem," they argued.
Buying Bitcoin is crucial for these companies, as their ability to acquire more of the asset will likely determine their long-term performance, the analysts said.
"Thus, if we look at multiple of Bitcoin net asset value, a company on a higher multiple today objectively screens more expensive, but that could be entirely justified by the market’s perception that it can sustain continued Bitcoin acquisitions over the long run," they wrote.
Against this backdrop, the analysts named Strategy as their top pick among Bitcoin treasury names, and initiated coverage of new players Semler Scientific and Fold Holdings with "overweight" ratings.