Is Twitter planning to add Bitcoin to its balance sheets? Many crypto bulls think it is.
This Monday, the social media giant stirred the cryptocurrency sector after announcing that it tends to raise $1.25 billion by selling convertible senior notes due for a 2026 expiry to accredited investors. Twitter also added that it would offer an additional $187.5 million aggregate principal amount of the notes to initial purchasers.
Anthony Pompliano…
….a “solo-capitalist” previously known for heading crypto-based investment firm Morgan Creek Digital Assets interpreted Twitter’s note auction plans as an indication that it would purchase bitcoin with the proceeds.
His reason was simple: MicroStrategy, a public-traded business intelligence firm, announced a similar treasury strategy on February 16, clearly telling its potential investors that it would use the raised capital — $600 million — to buy bitcoin tokens.
Twitter just announced a $1.25 billion convertible note offering.
Given the recent treasury strategy of Microstrategy, could @jack be planning to put bitcoin on Twitter's balance sheet?
Time will tell, but there are few people who understand the power of bitcoin like Jack.
— Pomp 🌪 (@APompliano) March 1, 2021
Twitter flirted with the idea of investing in Bitcoin earlier in February, right after Tesla Inc. revealed that it holds $1.5 billion of the cryptocurrency in its balance sheets. Ned Segal, the chief financial officer at Twitter, nonetheless conditioned their potential entry into the Bitcoin space by saying that their workers and vendors should first demand the cryptocurrency as payments.
Twitter’s latest announcement did not mention the word ‘bitcoin’ anywhere. Instead, the firm stated that it would use a portion of the proceeds to pay for its “convertible note hedge transactions.” Meanwhile, the firm will use the rest of the amount for capital expenditures, including potential acquisitions.
Bitcoin Pops Over $48,000
But the narrative of Twitter and its potential interest in buying bitcoin tokens spread across social media, led by highly-followed influencers like Mr. Pompliano and dozens of pseudonymous crypto-based profiles.
“Twitter finally will make some money,” said Edward Morra, an independent market analyst. “Nice to see barely profitable companies making bets on BTC and make more dollars from it than their core business.”
Bitcoin rates against the US dollar rose above $48,000 after Mr. Pompliano’s tweets attracted hundreds of retweets and likes. The cryptocurrency was already posting gains in the afternoon European session on the prospects of falling Treasury yields across the globe and rising risk-on sentiment.
BTC/USD dropped by more than 21 percent last week against a volatile sell-off in the US bond market. Traders questioned whether the rising yields would prompt the Federal Reserve to raise its benchmark lending rates. Low rates have underpinned Bitcoin’s 1,200 percent rise since last March.
The cryptocurrency continues to trade under short-term risks of higher yields. Technically, it is eyeing a breakout above $50,000.