BTCS Implements Innovative Loyalty Payments to Fight Back Short Sellers
In a bid to protect its stock value from the impact of short sellers, Ethereum treasury firm BTCS has announced a unique loyalty payment scheme and Ethereum dividends. This move aims to cultivate long-term support from investors and reinforce confidence in the company’s approach.
Loyalty Payments and Dividends: What You Need to Know
BTCS has introduced a one-time loyalty payment of $0.35 per share for shareholders who make their shares illiquid by registering them with the company’s transfer agent. This payment will be available in January. Additionally, the firm unveiled a $0.05 dividend, payable in Ethereum, scheduled for September. Investors who qualify will need to provide a digital wallet address to receive their Ethereum dividends, or they will receive the cash equivalent by default.
This initiative has had an immediate impact on the market, with BTCS shares rising by nearly 9% to close at $4.81 on Monday. Despite this growth, the firm’s stocks remain undervalued compared to its significant cryptocurrency holdings.
BTCS at a Discount: The Bigger Picture
BTCS holds a staggering 70,000 ETH, valued at approximately $303 million, yet the company’s market capitalization sits at around $215 million. This translates to a market-to-net-asset-value (mNAV) ratio of 0.75. Such a discount can pose challenges for crypto treasury firms, limiting fundraising opportunities that could otherwise bolster the company’s financial strategy.
According to CEO Charles Allen, this gap is not due to a lack of investor faith but rather the result of short selling activity aimed at driving down BTCS’ stock price. To mitigate this, BTCS has encouraged investors to register shares through its transfer agent—an approach reminiscent of strategies used by the GameStop investor community in 2021.
Benefits and Challenges of Registering Shares
Registering shares directly with the transfer agent can help limit the availability of shares for borrowing by short sellers. However, there are trade-offs for shareholders. Registered shares may take three to five business days to transfer, reducing liquidity and immediate access to funds.
Despite these potential drawbacks, this strategy could tighten the supply of available shares for borrowing, making it more expensive for short sellers to execute their trades. As Allen notes, the goal is to “squeeze out” shares available for borrowing and create a stronger defense against market manipulation.
The Ethereum-Centric Vision of BTCS
Established in 2013, BTCS is more than just a crypto treasury firm. The company operates Ethereum validators and builds blocks while leveraging decentralized finance protocols like AAVE to secure additional capital. Its cutting-edge strategy positions BTCS as a pioneer in the Ethereum ecosystem.
BTCS has branded its Ethereum dividend as a “Bividend,” continuing its trend of innovative shareholder-focused initiatives. Shareholders are encouraged to visit the company’s official website to learn more and take the necessary steps to participate in the dividend program.
Conclusion: A Bold Stand Against Short Sellers
BTCS sets a remarkable example for other crypto treasury firms by taking a proactive stance against short selling. Through loyalty payments, Ethereum dividends, and an emphasis on direct share registration, the company is paving a unique path that strengthens its relationship with investors and secures its market position.
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