A combination of continued good sentiment and company-specific news sent cryptocurrencies and related stocks higher on Tuesday. We haven’t seen many dramatic price increases for the former, but it still seems like the latter rally still has some miles to go.
The day truly belonged to the crypto stocks, with Mara Holdings (NASDAQ: MARA) closing a solid 10% higher, and all-in Bitcoin (CRYPTO: BTC) investor MicroStrategy (NASDAQ:MSTR) book an increase of 12%.
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A number of cryptocurrencies were trading in positive territory late that afternoon, albeit not at such impressive prices. Among the winners were: Hedera (CRYPTO: HBAR) And Mantra (CRYPTO: OM).
Needless to say, crypto stocks were in the spotlight on Tuesday as their news was more direct and dramatic. Both Mara Holdings and MicroStrategy provided updates on their funding, and investors cheered the fact that they will be able to devote more capital to buying more Bitcoin, still by far the most popular digital currency in the world.
Mara Holdings’ funding news was arguably more impressive. Last night, the company announced that it is stepping up the previously announced issuance of convertible bonds (debt securities that are converted into shares under certain conditions) through a private offering. It will issue $850 million worth of convertible senior notes due in 2030, paying a fairly favorable (for the company) 0% interest rate.
The initial purchasers of the notes will have an option to purchase an additional $150 million worth of securities. Mara Holdings originally wanted to raise $700 million. The company plans to use about $199 million to buy back existing convertible notes and the rest to buy Bitcoin.
As for MicroStrategy, it hasn’t increased its own financing efforts (yet), but it will still raise a lot more capital. The company announced shortly after the market closed Monday that it is issuing $1.75 billion of convertible senior notes due 2029, which, like Mara Holdings, have a 0% interest rate. It expects to give initial buyers an option to jointly purchase an additional $250 million.
MicroStrategy will use the proceeds to buy – you guessed it – Bitcoin.
That kind of liquidity flowing into just two companies will, at the very least, help support Bitcoin’s price, and perhaps extend the current crypto rally. And if Bitcoin does well, you can bet that altcoins in general will follow suit, just like them.
All of this is taking place in an environment of great optimism, with an incoming presidential administration clearly favorable to the crypto industry and a macroeconomy that appears to be taming the beast called inflation. These are good times for cryptocurrencies, and it looks like there are plenty of investors willing to get in on the action.
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Eric Volkman has positions in Bitcoin. The Motley Fool holds and recommends positions in Bitcoin. The Motley Fool recommends Hedera Hashgraph. The Motley Fool has a disclosure policy.
Why cryptocurrencies and crypto stocks bounced higher on Tuesday was originally published by The Motley Fool