- Trump Media is in advanced negotiations to acquire Bakkt, a crypto firm founded by ICE, for strategic expansion into digital assets.
- Bakkt has undergone multiple pivots, including consumer apps and institutional trading, and is now focusing on a B2B model.
- Speculation surrounds Trump Media’s potential use of Bakkt for innovative crypto strategies, including a Bitcoin Reserve concept.
Trump Media and Technology Group, the parent company of the social media platform Truth Social, has initiated talks to buy a crypto firm, Bakkt, which is publicly traded and was begun by ICE firm, the New York Stock Exchange. The potential takeover was confirmed by the Financial Times, with other reports showing that Bakkt was in the process of selling.
Having constantly changing business models, Bakkt recorded $27 million in operating loss in the latest quarter, better than the $53 million loss it registered in the corresponding period last year. The company has also revealed that its total revenues for the financial quarter have grown by 60% to $328m. However, the existing cash burn of roughly $89 million and expected cash balances below $40mln by year-end confirm the company’s financial challenges.
Bakkt’s Strategic Shifts and Institutional Focus
Since its inception, Bakkt has changed its approach multiple times to adapt to the constantly evolving cryptocurrency market. Initially launched in 2019 with Bitcoin futures, it quickly shifted to client services when it bought rewards program company Bridge2 Solutions for around $300m in 2020. The acquisition resulted in the developing a smart wallet application in 2021, which included loyalty rewards and cryptocurrency features.
The company changed its strategy in 2022 by moving from direct consumer involvement to business with clients, buying Apex Crypto for about $200M. Apex provides crypto trading solutions to fintechs and corporations, offering services to end consumers. Recently, Bakkt announced plans to debut an institutional trading platform, BakktX, with partnerships involving Hidden Road, Crossover Markets, and CoinRoutes. Despite these efforts, the firm faces strong competition from institutional players like EDX Markets, backed by Schwab, Citadel Securities, and Fidelity Digital Assets.
Potential Motivations for Trump Media’s Interest
The proposed acquisition raises questions about Trump Media’s strategic motivations. Market observers speculate that a pro-crypto presidency could create favorable conditions for digital assets, positioning Bakkt as a valuable asset in a supportive regulatory environment.
Speculation also exists regarding alternative strategies, including a theory suggesting that Trump Media could act as a vehicle for a Bitcoin Reserve. This concept, echoed by industry commentators, involves leveraging Bitcoin gains as a hedge against potential dollar devaluation. While such a move would face significant hurdles in Congress, it aligns with proposals from Senator Cynthia Lummis advocating for U.S. government-held Bitcoin reserves.
Despite Bakkt’s challenges, its valuation surged following news of the potential acquisition. Its stock price tripled, reaching a market capitalization of approximately $400 million. Meanwhile, Trump Media, despite generating modest revenues of $4 million in 2023, holds a market capitalization exceeding $7 billion, giving it leverage for acquisitions.
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