A combination of sustained positive sentiment and significant company-specific developments propelled cryptocurrencies and related stocks higher on Tuesday. While the price movements of cryptocurrencies were not particularly dramatic, the recent rally appears to have momentum.
The spotlight was on crypto stocks, with Marathon Digital Holdings (NASDAQ: MARA) closing up 10% and MicroStrategy (NASDAQ: MSTR), a major Bitcoin investor, rising by 12%. Several cryptocurrencies also saw gains, albeit at more modest rates, including Hedera (CRYPTO: HBAR) and Mantra (CRYPTO: OM).
The surge in crypto stocks can be attributed to immediate and impactful news from both Marathon and MicroStrategy regarding their funding efforts. Investors reacted positively to these updates, which indicated that both companies would have additional capital to invest in Bitcoin, the leading digital currency.
Marathon Holdings made headlines by announcing an increase in its previously disclosed offering of convertible notes—debt securities that can convert into equity under certain conditions. The company will issue $850 million in convertible senior notes due in 2030, with a favorable interest rate of 0%. Initial buyers will also have the option to purchase an additional $150 million worth of these securities. Marathon plans to allocate approximately $199 million to repurchase existing convertible notes, with the remainder earmarked for Bitcoin acquisitions.
Meanwhile, MicroStrategy announced plans to issue $1.75 billion in convertible senior notes due in 2029, also at a 0% interest rate. This offering is expected to include an option for initial purchasers to buy an additional $250 million worth of notes. The proceeds from this initiative will similarly be directed toward acquiring more Bitcoin.
This influx of liquidity into both companies is likely to support Bitcoin’s price and may extend the current cryptocurrency rally. Historically, when Bitcoin performs well, altcoins tend to follow suit.
The positive market sentiment is further bolstered by expectations of a supportive regulatory environment under the incoming presidential administration and signs that inflation is being managed effectively. With a favorable backdrop for cryptocurrencies, many investors are eager to capitalize on the opportunities presented.
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