Companies Eyeing Altcoin Accumulation

A number of public companies may be about to build hoards of altcoins in an attempt to pump their share prices.

Such companies are attempting to replicate the model mastered by Michael Saylor’s Strategy (MSTR), which has now accumulated 2.9% of all the bitcoin (BTC) that will ever exist. Since it embarked on its BTC treasury strategy in 2020, MSTR’s share price has increased by over 3,000%.

The bitcoin treasury strategy has been copied by several different companies, and in recent months, several have been doing something similar with ether.

However, the possibility of this model being used with other altcoins (a general term for any cryptocurrency that isn’t bitcoin) has been met with skepticism by some commentators, as reported by the Financial Times on Friday.

Blockchain platform Avalanche is exploring the possibility of selling a batch of its AVAX token to a publicly-listed shell company, which it would then use to earn yield and attract an investor base, according to the report, citing people familiar with the matter.

Canadian investment group RSV Capital is looking to raise $200 million of equity using a shell company that will be deployed to buy TON, the FT reported.

This method has brought some short-term gains where it has been tried. Charlie Lee, co-founder of Litecoin, invested $100 million into MEI Pharma (MEIP) for the company to buy LTC on July 18. MEIP shares jumped 17% following the announcement before falling back and remain around 4.9% higher in the last week, as of writing.

However, such a business plan will not yield any long-term benefits, according to Eric Benoist, a tech and data research specialist at Natixis CIB, who described it as “hugely speculative.”

“That’s not going to save them for a very long time,” he said. “At the end of the day, they’ll be worth whatever crypto they have on the balance sheet, and that’s it.”

Geoff Kendrick, Standard Chartered’s global head of digital assets, described a move into smaller altcoin treasuries as “a flash in the pan.” He added that if the prices of the tokens collapsed, the companies would “have pain for either equity holders or bondholders.”