SoftBank’s Masayoshi Son takes aim at another gamble — crypto venture with Twenty One Capital

SoftBank’s Masayoshi Son takes aim at another gamble — crypto venture with Twenty One Capital

  • 7 hours ago
  • americanbazaaronline.com
  • Keywords: Success, Success

SoftBank's Masayoshi Son is entering a new crypto venture with Twenty One Capital, a SPAC backed by Cantor Fitzgerald, despite past failures like WeWork and Bitcoin investments. The initiative includes significant bitcoin holdings from Tether and Bitfinex, reflecting Son's bold approach in volatile markets.

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SoftBank

SoftBank

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Analyst rating: Strong buy

SoftBank's investment in WeWork and Bitcoin has led to significant financial losses.

Twenty One Capital

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Analyst rating: N/A

Twenty One Capital is poised to debut with contributions from heavyweight crypto entities Tether and Bitfinex, starting off with more than 42,000 bitcoins, at a formidable valuation of about $3.6 billion.

Context

Analysis and Summary: SoftBank’s Crypto Venture with Twenty One Capital

Overview

  • Partnership Announcement: SoftBank, led by Masayoshi Son, joins forces with Cantor Fitzgerald’s SPAC arm to launch Twenty One Capital, a new player in the cryptocurrency market.
  • Initial Investment: The venture starts with over 42,000 bitcoins (valued at approximately $3.6 billion) contributed by crypto entities Tether and Bitfinex.
  • Market Context: Launched amid a volatile market environment influenced by Trump’s tariff war.

Market Trends

  • SPACs Decline: SPACs, once popular on Wall Street, have fallen out of favor. A PitchBook index tracking post-merger SPACs dropped nearly 80% over the past three years.
  • Crypto Market Volatility: Bitcoin’s value is highly speculative, influenced by sentiment and external factors like regulatory changes.

Business Impact

  • SoftBank’s Strategy: Masayoshi Son continues his high-risk investment approach, mirroring moves like WeWork and earlier Bitcoin investments. His ventures often rely on financial engineering to maximize returns.
  • Twenty One Capital’s Model: Similar to MicroStrategy, the venture aims to leverage financial engineering to acquire more bitcoins through equity financing. This strategy relies heavily on market valuation premiums.

Competitive Dynamics

  • Key Players: Tether and Bitfinex provide initial credibility and liquidity to Twenty One Capital. Cantor Equity Partners, led by Brandon Lutnick, serves as the SPAC vehicle for the merger.
  • Valuation Premium: The venture’s $93 billion valuation is nearly twice its bitcoin holdings’ worth, inviting hedge funds to exploit market dynamics through convertible debt and equity trades.

Risks and Challenges

  • Bitcoin Dependency: Bitcoin generates no cash flow, making it a speculative asset. In liquidation events, equity holders may face significant losses.
  • Dilution Risk: Financial vehicles built on bitcoin exposure may dilute shareholders to maintain liquidity, potentially leading to conflicts in shareholder interests.

Long-Term Implications

  • SoftBank’s Gambles: Son’s history of bold investments (e.g., WeWork, Bitcoin) highlights his willingness to take risks despite past failures. His ventures often redefine market dynamics but carry significant financial and reputational risks.
  • Regulatory Impact: The success of Twenty One Capital will depend on navigating regulatory challenges in the cryptocurrency space, which remains uncertain globally.

Financial Projections

  • Potential Returns: If Twenty One Capital achieves even half the premium MicroStrategy enjoys, SoftBank’s stake could grow to $1.7 billion from its initial investment.
  • Shareholder Dilution: The model relies on maintaining a steady increase in bitcoin per share ratio over time, which may not guarantee long-term stability.

Conclusion

Masayoshi Son’s latest venture into crypto with Twenty One Capital reflects his enduring appetite for high-risk, high-reward investments. While the strategy mirrors successful models like MicroStrategy, it also inherits significant risks tied to market volatility and regulatory uncertainties. SoftBank’s involvement underscores its ambition to remain a global tech force, even as it navigates a treacherous financial landscape.