Bitcoin giant listing meets cold response: Twenty One Capital's first-day stock price plunges 20%, what is the market worried about?

Twenty One Capital stock ticker is XXI. On Tuesday, its opening price was $10.74 per share, below the previous day’s close of $14.27 for its merger target, special purpose acquisition company Cantor Equity Partners.

The stock closed its first trading day at $11.42, down approximately 20% from the previous close. According to data from bitcointreasuries.net, Twenty One Capital holds 43,514 bitcoins, valued at approximately $3.9 billion to $4.0 billion, making it the third-largest corporate Bitcoin holder worldwide.

01 Key Event

Twenty One Capital is listed on the New York Stock Exchange through a merger with special purpose acquisition company Cantor Equity Partners.

The company’s journey to go public has not been smooth. Its stock experienced a sharp decline on the first trading day, opening at $10.74, substantially lower than Cantor Equity Partners’ Monday close of $14.27.

By the close, the share price further declined to $11.42, a 20% intraday drop. Although it slightly recovered to $11.67 in after-hours trading, up 2.2%, the market’s initial reaction appears cautious.

02 Company Background

Twenty One Capital is supported by stablecoin issuer Tether, cryptocurrency exchange Bitfinex, and Japanese tech investment giant SoftBank Group.

The company positions itself as a “Bitcoin-native” listed company, rather than merely a treasury holding Bitcoin. Its business model aims to go beyond simple Bitcoin accumulation, planning to develop a suite of Bitcoin-centric financial services.

CEO Jack Mellers is the founder of Bitcoin payment platform Strike and helped El Salvador adopt Bitcoin as legal tender. He aims to transform Twenty One Capital into a comprehensive Bitcoin financial platform rather than just an asset management firm.

03 Market Reaction Analysis

Twenty One Capital’s first-day performance reflects increasing market skepticism toward the so-called “digital asset treasury” business model.

Since Bitcoin reached an all-time high of $126,223.18 in early October, the cryptocurrency market has faced persistent selling pressure, with Bitcoin’s price falling more than 28% from its peak. This overall market environment has undoubtedly affected investor enthusiasm for newly listed crypto companies.

Earlier this year, when Bitcoin climbed to its high point in October, companies holding cryptocurrencies attracted significant investor interest. However, subsequent market declines have dragged down the entire sector. Industry observer Max Cether warned as early as May that blindly mimicking MicroStrategy’s Bitcoin treasury model could backfire.

04 Deep Challenges

One core issue facing Twenty One Capital is the lack of a clear, publicly disclosed business plan. The company has yet to specify its operational activities in detail or when it plans to launch them.

In an interview with CNBC, Jack Mellers sought to dispel market concerns: “We don’t want the market to see us merely as a treasury asset. Yes, we hold a large amount of Bitcoin, but we are also building a business.”

Unlike traditional Bitcoin treasury companies, Twenty One Capital aims to diversify its revenue streams without diluting its core Bitcoin holdings. The company plans to develop lending products and capital market tools based on its Bitcoin reserves, rather than viewing Bitcoin solely as a speculative store of value.

05 Industry Positioning

According to data from the Bitcoin treasury website, the 43,514 Bitcoins held by Twenty One Capital make it the third-largest corporate Bitcoin holder globally, behind MicroStrategy and Bitcoin mining firm Marathon Digital Holdings.

This substantial Bitcoin reserve is valued at approximately $4 billion at current prices, forming the basis of the company’s market capitalization. However, the market valuation does not fully reflect this asset base, indicating that investors are considering other factors.

Notably, Twenty One Capital plans to introduce a “Bitcoin per Share” metric to give investors a direct understanding of how its treasury influences shareholder value. In the highly transparent crypto industry, the company also commits to regularly providing on-chain reserve proofs.

06 Insights for Gate Users

For users of crypto exchanges like Gate.io, Twenty One Capital’s listing performance offers important market signals.

It shows that even with reputable backing and huge Bitcoin reserves, emerging crypto companies still face valuation challenges in traditional financial markets. Institutional investors remain cautious about business models without clear profit pathways.

The integration of crypto assets with traditional finance is still in its early stages, and there can be short-term deviations between stock prices and underlying asset values. The recent decline of over 28% from Bitcoin’s October all-time high affects the valuation of all crypto-related enterprises.

Investors need to distinguish among different ways of exposure to cryptocurrencies—direct Bitcoin holdings, investments in Bitcoin mining companies, or diversified Bitcoin financial platforms like Twenty One Capital—all with different risk-return profiles.

Future Outlook

As of the close on December 10, Twenty One Capital’s stock price slightly recovered to $11.67, up 2.2% from the previous close.

With a reserve of over 43,500 Bitcoins, the company’s market cap is around $4 billion. Its stock price trend is highly correlated with Bitcoin’s price, which fluctuated between $90,900 and $94,000, exerting corresponding pressure on the company’s share price.

The long-term performance of Twenty One Capital will depend on its ability to successfully build the promised Bitcoin financial ecosystem and generate substantial cash flow, rather than merely serving as a proxy for Bitcoin price movements.