CEP's Bitcoin Bet: A SPAC's Bold Leap into the Cryptocurrency Future

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In a bold move that sent its shares soaring, Cantor Equity Partners (CEP) announced a merger with Twenty One Capital—a Bitcoin-focused entity backed by Tether, SoftBank, and Bitfinex—creating a company valued at $3.6 billion. The deal, finalized on April 21, 2025, marks a watershed moment in institutional adoption of cryptocurrency, but it also raises critical questions about risk, governance, and the future of Bitcoin as an asset class.

The Merger: A SPAC’s Gamble on Bitcoin’s Potential

CEP, a special-purpose acquisition company (SPAC), agreed to merge with Twenty One Capital, a newly formed entity led by Jack Mallers, CEO of Strike (a Lightning Network payment platform). The transaction transforms CEP into a Bitcoin-native public company, re-listed under the ticker "XXI," with a pro forma enterprise value of $3.6 billion.

The deal’s financial terms are staggering. Proceeds from a $585 million PIPE offering and CEP’s trust account will fund the purchase of over 42,000 Bitcoin, positioning Twenty One as the world’s third-largest Bitcoin treasury. Tether, the world’s largest stablecoin issuer, will own 42.8% of the company post-merger, while SoftBank holds 24%. Public shareholders, however, will retain just 2.7% equity—a stark reminder of the risks SPAC investors often face.

The market’s reaction was immediate: CEP’s shares surged 55% in a single day on April 21, hitting $22.23, before climbing further to $22.23 the next day. The stock’s volatility underscores both enthusiasm for Bitcoin’s potential and skepticism about the deal’s structure.

A Bitcoin-Centric Financial Model

Twenty One’s vision is radical: it plans to abandon traditional financial metrics like earnings per share (EPS) in favor of Bitcoin Per Share (BPS) and Bitcoin Return Rate (BRR). These metrics will measure Bitcoin ownership and growth, respectively, redefining success in terms of cryptocurrency accumulation rather than fiat revenue.

“This isn’t about quarterly earnings—it’s about owning Bitcoin,” said Mallers, who will serve as CEO. The strategy hinges on Bitcoin’s appreciation, with the company’s value directly tied to price swings in a notoriously volatile market.

Supporters argue this approach aligns with Bitcoin’s core ethos as a censorship-resistant store of value. Tether’s CEO, Paolo Ardoino, echoed this sentiment: “Twenty One is building the infrastructure for a new financial system—one where Bitcoin is the foundation.”

Risks and Regulatory Hurdles

The merger is not without red flags. First, the extreme dilution of public shareholders raises governance concerns. With Tether and Bitfinex controlling over half the voting power, minority investors have minimal influence—a structure that could invite regulatory scrutiny.

Second, Bitcoin’s price volatility is existential for Twenty One. The company’s valuation is based on a Bitcoin price of $84,863.57 (a 10-day average as of April 21). If Bitcoin’s value plummets, the firm’s equity could evaporate. As of April 24, Bitcoin traded at $94,000, but its history of wild swings—from $60,000 to $120,000 in months—underscores the risk.

Regulatory uncertainty is another hurdle. The SEC must approve the merger, and its stance on crypto remains unpredictable. In 2023, the agency halted multiple SPAC-crypto deals, citing concerns about investor protection.

Conclusion: A High-Reward, High-Risk Bet

CEP’s merger with Twenty One Capital is a landmark event in the crypto space, offering investors a direct stake in Bitcoin’s growth trajectory. For bulls, the deal represents a chance to capitalize on institutional adoption and the currency’s potential as a global reserve asset. For skeptics, it’s a reminder of the risks inherent in speculative ventures tied to a volatile asset.

The success of this strategy hinges on two factors: Bitcoin’s price and regulatory clarity. If Bitcoin’s value continues to climb and regulators greenlight the deal, Twenty One could become a crypto powerhouse. But if Bitcoin falters or regulators push back, shareholders may find themselves on the losing side of a high-stakes gamble.

Investors considering this play must weigh the allure of Bitcoin’s potential against the fragility of its market—and ask themselves: Is now the time to bet big on crypto’s future?

Data sources: CEP press release (April 21, 2025), Bloomberg, CoinDesk, and company filings.