June 30, 2025 – The fundamental principle of a business is to generate an economic return from productive assets.
Typically, a business identifies a need in the market, creates a product or service to meet that need, and delivers it to customers while capturing value in return.
Most rational businesses aim to maximize their return on capital, primarily through the efficient use of resources to generate revenue. In pursuit of this goal, businesses typically seek to divest non-productive assets such as excess working capital, unused land, or business lines not earning their cost of capital.
The fundamental business principle of efficient balance sheet utilization has remained constant for decades, however, the market has recently experienced a radical shift. A new model has emerged over the past 18 months, the crypto treasury model, that has turned efficient balance sheet theory on its head.
A crypto treasury company is a publicly-traded operating business that holds cryptocurrencies, most often bitcoin, as a core component of its corporate treasury reserve and value proposition. Crypto treasury companies seek to raise capital, either through the issuance of common shares, preferred shares, or convertible bonds, to continuously invest in an unproductive asset (crypto) that sits on their balance sheet. An increasing number of businesses are effecting crypto treasury initiatives because the market is rewarding these companies handsomely, with valuations well in excess of the book value of their crypto holdings.
This crypto treasury phenomenon was pioneered by a company called Strategy (formerly known as MicroStrategy), which trades on the Nasdaq under the symbol MSTR.
MSTR was a software company co-founded by Michael Saylor in 1989. Its business model initially focused on data mining and business intelligence software. During the dot-com boom it became a market darling, and its stock surged after its IPO in 1998. After the peak of the Nasdaq in March 2000, MSTR shares suffered a devastating decline, spurred not only by the dot-com bust but also by an accounting scandal that was later settled with the SEC. Its stock would remain relatively stagnant over the next twenty years.
In 2020, MSTR made a dramatic pivot. Amid concerns over U.S. dollar debasement and persistent inflation, MSTR’s CEO, Michael Saylor, made headlines by announcing a radical new direction for the company – converting excess corporate cash into bitcoin. MSTR announced its bitcoin treasury strategy in August 2020, noting that it acquired 21,454 bitcoins at an aggregate purchase price of $250 million ($11,652 per BTC).
At the time, MSTR CEO Michael Saylor stated: “This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash. Since its inception over a decade ago, Bitcoin has emerged as a significant addition to the global financial system, with characteristics that are useful to both individuals and institutions. MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.”
While the strategic pivot made headlines, the treasury initiative took several years to catch on with investors. From 2020 to 2024, MSTR continued to issue convertible debt and stock offerings to fund more BTC purchases. By mid-2024, MSTR had acquired over 214,000 BTC worth billions of dollars, making it the largest corporate holder of bitcoin in the world.
It was at this time that its shares took off and MSTR became somewhat of a meme stock, with its CEO, Michael Saylor, becoming a celebrity.
Moreover, a stunning trading dynamic emerged. Starting in early 2024, as MSTR shares rocketed upward, its stock traded to a valuation of more than a 100% premium to the underlying value of its bitcoin (net asset value or NAV). The stock became a phenomenon backed by an army of unsophisticated retail investors.
This NAV premium dynamic was a market phenomenon that left many professional investors scratching their heads. Retail investors buying MSTR shares were paying $200,000 per bitcoin that traded at $100,000, when acquiring a bitcoin was relatively easy through a crypto platform or an ETF.
What is even more incredible is that MSTR’s NAV premium has remained robust even as the company has issued billions of dollars worth of shares into the market, fueling more bitcoin purchases. MSTR’s At‑The‑Market (ATM) equity program, in which it sells new shares into the open market (increasing the supply), has been the most aggressive in corporate history. In total, MSTR raised more than $10.0 billion of equity since October 2024, part of a broader $42 billion capital-raising initiative equally split between equity and debt. MSTR’s proposed $21 billion equity ATM is the largest ATM offering in history, dwarfing others, such as Tesla’s previous $5 billion ATM.
While many question the underlying rationale behind the market phenomenon of the enormous NAV premium in MSTR shares, or debate the logic of a crypto treasury initiative, the fact is that it is working in the market as investors exhibit tremendous demand for crypto treasury company shares.
This insatiable demand from predominantly retail investors has produced the expected result: a rapid proliferation of crypto treasury companies over the past year.
According to BictoinTreasuries.net, there are more than 100 crypto treasury companies (with most focused on bitcoin), as those seeking to replicate MSTR’s success have taken the treasury model global. Crypto treasury initiatives have spread across world markets, emerging in the U.K., Japan, and South Korea. Even meme stocks have joined in on the latest hot new trend, with companies such as GameStop (GME) and Trump Media & Technology Group (DJT) announcing bitcoin treasury strategies, along with bitcoin purchases exceeding $1 billion.
The trend is picking up steam. On Monday alone six public companies in North America announced a crypto treasury strategy.
The crypto treasury phenomenon has also extended to SPACs as well. The trend caught the attention of SPAC investors when blank check company Cantor Equity Partners announced a merger with bitcoin treasury company Twenty One Capital, and its shares skyrocketed as much as 400%.
Since then, numerous SPACs have announced crypto deals, including SilverBox IV’s proposed merger with Parataxis Holdings and Columbus Circle Capital I’s business combination with ProCap BTC. The market continues to take a keen interest in SPAC crypto mergers, typically valuing the shares well above trust value, thereby buoying SPAC arbitrage returns.
June was another busy month for SPAC initial public offerings, with ten new issues coming to market, raising nearly $2 billion of capital (the Accelerate Arbitrage Fund (TSX: ARB) participated in seven of these IPOs). Meanwhile, six SPAC mergers were announced in the month, with two of these focused on crypto treasury companies.
Traditional merger and acquisition activity continues its post-liberation day rebound, with 18 public mergers announced in North America this month worth more than $40 billion in total. In contrast, 10 public mergers closed in June, worth an aggregate of $25 billion.
When the Trump administration was first elected, M&A practitioners expected an easing of the regulatory environment, joking that MAGA stood for “Make M&A Great Again”. After a few early stumbles, hopes of a dramatic shift in the harsh regulatory regime that had grown throughout the Biden administration were dashed, albeit temporarily.
Two significant milestones emerged this month that indicate the regulatory freeze on M&A may be finally thawing.
- After initially getting rejected by the Biden administration, ostensibly under the guise of national security, Nippon Steel’s $15 billion acquisition of U.S. Steel was approved by the Trump administration’s CFIUS (the Committee on Foreign Investment in the United States). The merger, allowed under a national security agreement, will enable billions of dollars of investment to flow into the declining American steel industry.
- After the Biden Administration’s DOJ (Department of Justice) sued to block Hewlett Packard Enterprise’s $14.3 billion acquisition of Juniper Networks, the Trump administration’s settled with the companies, allowing them to close the merger after agreeing to a small divestment and licensing deal.
The M&A and SPAC markets are cyclical, like most segments of the capital markets. As the regulatory environment continues to improve and investor sentiment resumes its upward trajectory, whether it pertains to crypto treasury companies or other emerging themes in the market, the SPAC and M&A markets appear to be heading into a busy and fruitful second half of 2025. The up part of the cycle continues.
The AlphaRank.com Merger Monitor below represents Accelerate’s proprietary analytics database on all announced liquid U.S. mergers. The AlphaRank Merger Arbitrage Effective Yield represents the average annualized returns of all outstanding merger arbitrage spreads and is typically viewed as an alternative to fixed income yield.
Each individual merger is assigned a risk rating:
- AA – a merger arbitrage rated ‘AA’ has the highest rating assigned by AlphaRank. The merger has the highest probability of closing.
- A – a merger arbitrage rated ‘A’ differs from the highest-rated mergers only by a small degree. The merger has a very high probability of closing.
- BBB – a merger arbitrage rated ‘BBB’ is of investment grade and has a high probability of closing.
- BB – a merger arbitrage rated ‘BB’ is somewhat speculative in nature and has a greater than 90% probability of closing.
- B – a merger arbitrage rated ‘B’ is speculative in nature and has a greater than 85% probability of closing.
- CCC – a merger arbitrage rated ‘CCC’ is very speculative in nature. The merger is subject to certain conditions that may not be satisfied.
- NR – a merger-rated NR is trading either at a premium to the implied consideration or a discount to the unaffected price.
The AlphaRank merger analytics database is utilized in running the Accelerate Arbitrage Fund (TSX: ARB), which may have positions in some of the securities mentioned.
