Trump Media to Invest $2.5 Billion in Bitcoin, Stock Plummets
Trump Media, the company associated with Donald Trump, announced on Tuesday that it plans to invest $2.5 billion in Bitcoin to establish a strategic reserve of the cryptocurrency. This significant investment comes as a surprise to many, especially given the company’s stock performance following the announcement.
Unlike other companies that have adopted similar strategies, such as Strategy and Méliuz, Trump Media’s stock experienced a sharp decline of 13.5% after the news broke. This raises questions about investor confidence and the market’s reaction to the company’s foray into the volatile world of cryptocurrency.
The $2.5 billion investment is projected to acquire over 22,500 Bitcoins, potentially positioning Trump Media as the fourth-largest corporate holder of the cryptocurrency. This bold move signals a significant shift in the company’s financial strategy.
Strategic Bitcoin Reserve: A Closer Look
According to a document filed with the U.S. Securities and Exchange Commission (SEC), Trump Media intends to raise the $2.5 billion through a combination of methods. Approximately $1.5 billion will be generated through the sale of common stock, while the remaining $1 billion will be secured through convertible notes, effectively functioning as a private debt offering.
“The Company intends to use the net proceeds from the sale of the Notes to secure the Notes themselves and to implement the Company’s Bitcoin treasury strategy.”
The document further states that the gross proceeds from the sale of the Notes will be approximately $960 million, after deducting an original issue discount of 4.0%.
The financing is expected to be finalized by Thursday, leading some to speculate that this substantial purchase could drive up the price of Bitcoin. However, the market’s initial reaction has been mixed.
Currently, Bitcoin is trading at around $110,300, showing a slight increase of 1% over the past 24 hours. Meanwhile, Trump Media’s shares, traded on the Nasdaq, are down 13.5% on Tuesday.
Top Bitcoin Holders: Trump Media Joins the Ranks
With the planned acquisition of over 22,500 Bitcoins, Trump Media is poised to become one of the top five public holders of the cryptocurrency. This move places them in the company of established Bitcoin investors.
The leading corporate holders of Bitcoin include:
- Strategy (576,230 BTC)
- MARA Holdings (48,137 BTC)
- Twenty One Capital (31,500 BTC)
Beyond Trump Media, Donald Trump also has exposure to the cryptocurrency sector through World Liberty Financial. However, this venture is less focused on Bitcoin and has recently launched the USD1 stablecoin, a cryptocurrency pegged to the U.S. dollar, competing with Tether (USDT).
Furthermore, Trump has launched his own memecoin and previously sold various NFT collections. These activities have drawn scrutiny, with opposition figures citing potential conflicts of interest.
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