DeFi
Bitcoin cash strategy drives up stock price of Canadian company DeFi Technologies
MicroStrategy Bitcoin The treasury playbook has now spread to Canada, with a local crypto-focused public company adopting Bitcoin as its “primary Treasury reserve asset.”
DeFi Technologies, which trades on Cboe Canada under the ticker “DEFI,” is the next in a growing list of global public companies to bet on BTC – and for remarkably similar reasons to its predecessors.
“DeFi Technologies estimates [Bitcoin] has unique characteristics as a rare and finite asset, making it a reasonable hedge against inflation and a refuge against currency depreciation,” DeFi Technologies wrote in a Monday statement. Press release.
To kick off its new strategy, the company announced the purchase of 110 BTC, worth CA$10.5 million (US$7.6 million) at the time of writing. Following this news, the company’s stock rose 26% on Monday to C$2.01, bringing its total market capitalization at $588 million.
However, DeFi Technologies does not entirely copy the techniques of MicroStrategy and MetaPlanet. In a message to Decrypt, the company confirmed that it does not plan to use stock dilution or loans to acquire more BTC. They also stated that they currently have no plans to add more crypto to their balance sheet outside of BTC.
“The Company has a significant cash position on its balance sheet and views Bitcoin as a reasonable hedge against inflation and a safe haven against currency depreciation,” the company said. “As the best-performing asset of the past decade, Bitcoin offers significant short- and long-term potential to increase company cash flow.”
As its name suggests, DeFi Technologies is already a crypto-native player, providing various crypto-related investment products, including various exchange-traded products (ETPs), as well as “strategic companies and critical Web3 infrastructure ”, according to its website.
Valour, the company’s asset management-focused subsidiary, holds CA$837 million in assets under management across its various ETPs, one of which includes a new Bitcoin ETP that claims to pay investors a Annual yield of 5.65%.
“Given the significant value gap between Bitcoin and other traditional assets, DeFi Technologies believes that Bitcoin has the potential to generate outsized returns as it gains greater acceptance,” the company added.
DeFi Technologies also owns crypto market research firm Reflexivity Research, co-founded by popular Bitcoin influencers Will Clemente and Anthony Pompliano.
“Bitcoin is slowly seeping into the treasuries of public companies around the world,” tweeted Pompliano, now the founder of Pomp Investments. “We remain shareholders of DeFi Technologies ($DEFTF) and believe the company is still undervalued.”
MicroStrategy pioneered the model of holding a significant amount of Bitcoin in its treasury as a reserve asset, and has since become the largest holding company with 214,400 BTC, worth around $15 billion at current prices.
In April, Japanese public company MetaPlanet also made Bitcoin its Treasury reserve assets of choice, and thus recorded record gains in the price of its shares.
Last week, healthcare products company Semler Scientific announced plans to buy up to $150 million in BTC following an initial purchase of $57 million last month. Likewise, SMLR stock is up 63% over the past 30 days.
Updated to add comment from DeFi Technologies. Edited by Andrew Hayward