Crypto treasury firms are beginning to experience increases in share prices due to stock buyback initiatives, which analysts suggest may indicate that these firms are striving for greater credibility.
The media company Thumzup, associated with Trump Jr., which holds Bitcoin (BTC) and Dogecoin (DOGE), announced on Wednesday that it is raising its share buyback from $1 million to $10 million, which led to a 7% increase in its stock (TZUP) during the session and an additional 0.82% after hours, bringing it to $4.91.
Meanwhile, Solana treasury firm DeFi Development Corp (DFDV) expanded its share repurchase program from $1 million to $100 million, which resulted in its stock seeing over a 5% increase, later settling at a more than 2% gain and additional 1% after hours to trade at $15.50.
The increases follow a Sept. 10 report by Coinbase’s head of research, David Duong, and researcher Colin Basco, which predicted that publicly traded companies buying crypto are entering a “player vs player” era to compete more aggressively for investor interest.
The treasury contest is about credibility
In a conversation with Cointelegraph, Ryan McMillin, chief investment officer of Australian crypto investment firm Merkle Tree Capital, mentioned that the stock buybacks signify that the crypto treasury contest is evolving into a “credibility race.”
“Merely stating ‘we hold Bitcoin’ is no longer sufficient. Investors seek professional capital allocation — buybacks, dividends, and definitive treasury strategies,” he stated.
“The combination of corporate finance tools with the digital-asset narrative is significant. It indicates these firms desire to be evaluated on more than just their Bitcoin exposure, but also on shareholder profits.”
Buybacks signify confidence
However, not all crypto treasury firms initiating buybacks have seen positive responses. TON Strategy Company, previously known as Verb Technology Company, made a similar decision on Sept. 12, but its stock (TONX) dropped by 7.5%.
McMillin explained that share buybacks act as a “classic signal of confidence” when a company believes its stock is undervalued, which is crucial for listed crypto-treasury firms since “their valuations commonly fluctuate at a premium or discount in relation to their Bitcoin holdings (mNAV).”
“A buyback can narrow that disparity by reducing float and demonstrating financial discipline — which investors appreciate. The price can also shift as traders anticipate increased demand. Purchasing additional Bitcoin enhances exposure to volatility,” he noted.
“Conversely, a buyback directly increases shareholder value, while preserving the narrative of the crypto treasury. It also attracts a wider range of investors — some seek the Bitcoin theme, while others value capital discipline. A strategically timed buyback achieves both.”
Crypto treasury competition is between dollars and Bitcoin
Kadan Stadelmann, chief technology officer of the blockchain-based Komodo Platform, informed Cointelegraph that when a company utilizes cash reserves to buy back shares, fewer shares are available for the public, resulting in scarcity and upward price pressure.
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“The crypto treasury firms are vying to construct the most attractive crypto treasury structure, but we are witnessing hyperbitcoinization, which constitutes de-dollarization—Bitcoin in opposition to the dollar,” he explained.
Crypto asset treasuries are here to stay
Bitbo is monitoring companies that have incorporated Bitcoin into their balance sheets, accumulating over 1.4 million coins, which equates to roughly 6.6% of the total supply.
Michael Saylor’s company, Strategy, leads with 638,985 Bitcoin and continues to purchase regularly. Some analysts suggest the crypto-buying firms market is oversaturated and that not all will endure in the long run.
Stadelmann expressed doubt about the slowdown of “the phenomenon of crypto asset treasuries,” predicting that an “increasing number of companies will allocate a portion of their treasuries into Bitcoin and other crypto assets, including firms within the Fortune 500.”
“A significant inquiry for investors is which companies are likely to retain their Bitcoin during turbulent periods, as opposed to selling in response to bear markets or crises.”
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