Trump media stocks plummet on plans to raise billions to invest in bitcoin

Stocks in Trump Media & Technology Group fell over 10% on Tuesday after the firm unveiled a contentious proposal to raise $2.5 billion from institutional investors to buy bitcoin. The move is the most recent and most ambitious attempt by US President Donald Trump's media business to further engage with the crypto space, the New York Times reported.

The firm-operator of the Truth Social network stated it would raise the funds in a combination of $1.5 billion of stock and $1 billion of convertible notes, approaching about 50 institutional investors. The funds will be used to create a corporate bitcoin treasury. Custody of the assets will be provided by Crypto.com and Anchorage Digital, the firm stated.

“We view bitcoin as an apex instrument of financial freedom,” said Devin Nunes, CEO of Trump Media. “And now Trump Media will hold cryptocurrency as a crucial part of our assets.”

Even as there was optimism surrounding the deal, the stock market reacted with scepticism. Trump Media shares fell more than 10% when the news was announced, showing investors' discomfort with both the magnitude of the investment and the ongoing volatility of bitcoin. The cryptocurrency traded at about $109,900 on Tuesday, just below its recent all-time high of above $111,000.

Embracing "America First" through digital assets

Trump Media framed the bitcoin shift as part of its larger strategic acquisition fund, established to finance ventures under President Trump's "America First" agenda. The firm previously this year launched Truth.Fi, a financial arm that it stated would invest $250 million in crypto and other emerging markets.

The bitcoin investment strategy follows in the footsteps of moves by companies such as MicroStrategy and Tesla, which have also purchased huge bitcoin holdings on their balance sheets. Few firms have, however, coupled cryptocurrency investments with political branding and leadership so closely, analysts explained. Trump himself has a majority stake in the company in excess of 50% through a revocable trust.

Financial services company Cantor Fitzgerald advised the bitcoin transaction. Its former chief executive, Howard Lutnick—who is now Trump's secretary of commerce—is a well-known Trump friend. Cantor last month said Lutnick would transfer control of the company to trusts for his children.

Political crossover and regulatory scrutiny

The action is part of the Trump administration's escalating efforts to legitimize and promote cryptocurrency, with Congress set to move crypto-friendly legislation. In March, Trump called for the establishment of a national strategic bitcoin reserve to pool U.S. government holdings, most obtained through criminal seizures.

Last week, Trump invited select dinner guests to be among the lead purchasers of his own "memecoin," which gained attention—and criticism—by government watchdog organizations over possible violations of federal regulations prohibiting the solicitation of gifts.

Trump's sons have joined the crypto sector as well, supporting projects like World Liberty Financial and a bitcoin-mining company with a plan to go public.

Though bitcoin supporters extol it as "digital gold" owing to its fixed supply of 21 million coins, its wild price fluctuations still keep people questioning its stability as a company asset. Analysts also caution that Trump's own regulatory actions may end up controlling the value of his company's digital assets.

Growing questions, declining confidence

Others have contended that the action has severe implications regarding conflicts of interest and market manipulation, particularly in light of Trump Media's financial well-being now being directly linked to a cryptocurrency market over which the president has significant sway.

With its shares already on the ropes and public scrutiny amping up, Trump Media's bitcoin plan marks a risky—but potentially visionary—new era for the company. Only time will tell if investors will see it as bold or foolish.