Crypto treasury firms are beginning to witness share price increases driven by stock buyback initiatives, which analysts suggest may indicate a struggle for credibility among these companies.
Media company Thumzup, linked to Trump Jr. and holding Bitcoin (BTC) and Dogecoin (DOGE), announced on Wednesday that it was boosting its share buyback from $1 million to $10 million, which led to a 7% rise in its stock (TZUP) for the session and an additional 0.82% after hours, reaching $4.91.
Concurrently, Solana treasury company DeFi Development Corp (DFDV) increased its share repurchase from $1 million to $100 million, resulting in its stock gaining more than 5%, before stabilizing at a 2% increase and another 1% after hours to trade at $15.50.
The increases follow predictions made by Coinbase’s head of research, David Duong, and researcher Colin Basco in a report from Sept. 10, suggesting that publicly listed companies engaging in crypto are entering a “player vs player” phase, vying more aggressively for investor capital.
Treasury race becoming about credibility
In an interview with Cointelegraph, Ryan McMillin, chief investment officer at Merkle Tree Capital, an Australian crypto investment firm, asserted that the recent stock buybacks illustrate that the crypto treasury sector is evolving into a “credibility race.”
“It’s no longer adequate to simply state ‘we hold Bitcoin.’ Investors are looking for professional capital allocation — buybacks, dividends, and transparent treasury strategies,” he stated.
“The integration of corporate finance strategies with the digital asset narrative is impactful. It signals these companies wish to be evaluated not just based on Bitcoin exposure, but also on shareholder returns.”
Buybacks also a sign of confidence
However, not all crypto treasury companies employing buyback strategies have seen positive results. TON Strategy Company, formerly Verb Technology Company, executed a similar initiative on Sept. 12, but its stock (TONX) fell by 7.5%.
McMillin remarked that share buybacks serve as a “classic indicator of confidence,” suggesting that a company views its stock as undervalued. This is significant for publicly traded crypto treasury firms, as “their valuations frequently fluctuate at a premium or discount to their Bitcoin holdings (mNAV).”
“A buyback can help narrow that gap by reducing the float and demonstrating discipline — an approach that investors will reward. The price can also fluctuate as traders anticipate increased demand volume. Increased Bitcoin acquisitions heighten exposure to volatility,” he noted.
“Conversely, a buyback directly enhances shareholder value while maintaining the crypto treasury narrative. It attracts a wider range of investors — some prefer the Bitcoin narrative, while others seek capital discipline. A well-timed buyback reconciles both.”
Crypto treasury race about dollar vs Bitcoin
Meanwhile, Kadan Stadelmann, chief technology officer of the blockchain-based Komodo Platform, shared with Cointelegraph that utilizing cash reserves for share buybacks decreases the volume available to the public, creating scarcity and exerting upward price pressure.
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“Crypto treasury companies are competing to develop the most attractive treasury structure; however, what we observe is hyperbitcoinization, which aligns with de-dollarization — Bitcoin versus the dollar,” he explained.
Crypto asset treasuries not going away anytime soon
Bitbo is monitoring firms that have integrated Bitcoin into their balance sheets, holding over 1.4 million coins, accounting for roughly 6.6% of the total supply.
Michael Saylor’s company, Strategy, leads with 638,985 Bitcoin and continues to make consistent purchases. Some analysts have suggested the market for crypto-buying companies may be oversaturated and that not all will thrive long-term.
Stadelmann expressed skepticism about the “phenomenon of crypto asset treasuries” diminishing anytime soon, asserting that “more companies will begin allocating portions of their treasuries into Bitcoin and other crypto assets, including Fortune 500 firms.”
“A significant concern for investors is identifying which companies are most likely to maintain their Bitcoin holdings through fluctuating market conditions rather than selling during downturns or panic episodes.”
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