Why Are Crypto Treasury Companies Buying Bitcoin and Ethereum Again?
Crypto treasury firms Strive, BitMine, and Strategy have all announced significant new cryptocurrency purchases. In one week alone, Strive and Strategy invested over $500 million in Bitcoin.
Strive purchased an additional 1,800 BTC at an average cost of $79,431, bringing its total holdings to 23,156 BTC. The company funds its purchases by issuing new shares, a core part of its business model that performs well when crypto prices rise. Despite the large purchase, its cash reserves increased to $183.5 million.
BitMine acquired 53,501 ETH, marking its 65th consecutive week of buying. The company stakes 86% of its 5,067,309 ETH holdings through its network, generating an estimated $335-390 million in annual yield. It now holds 4.9% of Ethereum's total supply.
Strategy resumed buying after a 10-week pause, adding 4,603 BTC with an average cost basis of $75,412.
This buying spree follows a major shift in ETF flows. After outflows in June, U.S. Bitcoin spot ETFs saw over $3.3 billion in net inflows in August. Ethereum ETFs also reversed course with approximately $1.75 billion in inflows, their strongest since last October. Rising crypto prices boost the share prices of these treasury firms, enabling them to raise more capital to buy more crypto, creating a feedback loop.
Contrary to speculation about a rotation from AI stocks, data shows the AI sell-off peaked in July. August saw improved market sentiment, with the Nasdaq 100 gaining 4.2%. Other indicators, like surging trading volume on Korea's Upbit exchange, point to capital moving into crypto. Supportive U.S. regulatory developments, such as the upcoming vote on the CLARITY Act, also contributed to the positive environment.
For these companies, the primary constraint to continued buying is not falling crypto prices, but the closure of their capital-raising channels.
marsbit09/01 02:31
