Cantor SPAC’s 220% Surge: A Risky Bet on Bitcoin’s Institutional Future?

The stock of Cantor Equity Partners Inc. (CEP), a special purpose acquisition company (SPAC), surged 197% in early April 2025 after announcing plans to merge with Twenty One Capital Inc., a Bitcoin-focused investment vehicle backed by Tether, Bitfinex, and SoftBank Group. The deal, which aims to create a publicly traded Bitcoin treasury valued at $3.6 billion, has sparked both excitement and skepticism. For public investors, the merger offers a leveraged bet on Bitcoin’s institutional adoption—but at a cost. Let’s unpack the risks and rewards.

The Deal’s Structure: A Leveraged Bitcoin Play

The merger, if completed, would re-list the combined entity under the ticker “XXI” with a Bitcoin treasury of $3.9 billion—third largest among public holders. This treasury is funded by $1.5 billion from Tether, $600 million from Bitfinex, and $900 million from SoftBank. However, the deal’s terms reveal stark asymmetries in ownership:
- Insider dominance: Tether holds 42.8% equity and 51.7% voting power; Bitfinex and SoftBank control 16% and 24%, respectively.
- Public shareholders: Just 2.7% of equity, despite the stock’s meteoric rise.

This extreme dilution means public investors are effectively buying a call option on Bitcoin’s price. If Bitcoin hits $94,000, the company’s market cap could reach three times its Bitcoin holdings’ value—a 200% premium. Yet, if Bitcoin falters, their minimal equity stake could leave them exposed to steep losses.

Valuation and the Bitcoin Leverage Model

The deal’s financial engineering is its most intriguing—and contentious—feature. The merger values Twenty One Capital at $3.6 billion, but its Bitcoin holdings alone (42,000 BTC) were worth roughly $1.4 billion at April 2025 prices (~$33,000 per BTC). The $540 million in merger proceeds plus a $585 million subscription agreement aim to buy more Bitcoin, further amplifying leverage.

This model hinges on Bitcoin’s price trajectory. At $94,000—nearly triple its April 2025 price—the company’s valuation could soar to $4.2 billion, yielding a 200% premium to its Bitcoin holdings. However, such a scenario requires Bitcoin to outperform even its best bull runs of 2021.

Leadership and Strategy: A Bitcoin Treasury with Ambition

Jack Mallers, CEO of Strike and a Bitcoin advocate, will lead the new entity. The firm plans to measure shareholder value through metrics like Bitcoin Per Share (BPS) and Bitcoin Return Rate (BRR), signaling a focus on accumulation over trading. This strategy aligns with Tether’s CEO Paolo Ardoino, who emphasized prioritizing “institutional adoption over speculation.”

The venture also aims to launch Bitcoin-backed financial products and media initiatives, positioning itself as a bridge between crypto and traditional finance. Yet, competition looms. MicroStrategy, which holds ~170,000 BTC, saw its shares dip 0.1% during the announcement—a muted reaction underscoring the niche nature of Twenty One’s play.

Risks and Regulatory Hurdles

The deal faces significant headwinds. First, regulatory approvals are uncertain. U.S. authorities have increasingly scrutinized SPACs and crypto firms, and Tether’s history of controversy (e.g., the 2022 “reserve” dispute) could complicate matters. Second, Bitcoin’s volatility remains a wild card. A prolonged bear market could render the leverage model destructive.

Political tailwinds, however, may help. The Trump administration’s push for digital asset regulation has created optimism, but such policies are still nascent.

Conclusion: A High-Risk, High-Reward Experiment

Cantor Equity Partners’ merger with Twenty One Capital is a bold gamble. For public investors, the 2.7% equity stake offers a leveraged exposure to Bitcoin’s upside—potentially a 200% premium at $94,000—but with catastrophic downside risk if Bitcoin falters. The deal’s concentrated ownership and reliance on Bitcoin’s price trajectory make it more akin to a derivatives trade than a traditional investment.

While the merger reflects Bitcoin’s growing institutional appeal, it also underscores the risks of financial engineering in crypto markets. With over $3.9 billion tied to a volatile asset and regulatory clouds looming, the XXI ticker may become a litmus test for whether Bitcoin can sustain its institutional momentum—or if this is another speculative bubble in the making.

Investors would do well to remember: leverage is a double-edged sword. At 220% returns for early buyers, the gains are undeniable. But as history shows, such outsized returns often precede abrupt corrections. For now, the bet is on Bitcoin—and the institutions backing it.