U.S. listed companies are flocking to "buy coins"; what is the effect of the second growth curve?

Original author: Fairy, ChainCatcher

Original text edited by: TB, ChainCatcher

"Buying coins" has become a cheap and fast method for boosting market capitalization in the stock market.

The "shanzhai season" in the US stock market is booming, with the main business of listed companies becoming a backdrop, while digital assets have turned into the new engine of market value.

But the problem is becoming increasingly acute: will the market really keep paying for this valuation game under the guise of borrowing coins?

Valuation Logic: How Does Buying Coins Affect Enterprise Value?

"Buying coins" feels like an experiment in valuation shift woven together by emotions, liquidity, and narratives.

In traditional valuation frameworks, a company's market value derives from the comprehensive pricing of core variables such as its profitability, capital structure, growth potential, and free cash flow. However, in this wave of "buying coins," companies have leveraged their holding of crypto assets as a form of "financial allocation," resulting in a repricing of the market's valuation of them.

When companies include Bitcoin or other mainstream crypto assets on their balance sheets, the market valuation is attached with a premium multiple based on the price elasticity and trading expectation of crypto assets. In other words, a company's market value not only comes from value creation but also from a leveraged amplification of the possibility of "price increases."

However, this structure almost places "liquidity narrative" above corporate management, alienating financial allocation as the main axis of capital operation.

Short-term boost, long-term still a question mark

It is undeniable that entering the cryptocurrency space does have the ability to stimulate stock prices in the short term. Taking the automotive trading service provider Cango as an example, the company announced in November 2023 that it would enter the Bitcoin mining sector, investing $400 million to acquire 50 EH/s of computing power resources, which led to a 280% surge in its stock price. Similarly, there are many companies with lackluster main business performance or even deep financial troubles that are also trying to seek revaluation in the capital markets by leveraging the "buy coin" narrative. (Related reading: The rise of ETH and SOL's version of "MicroStrategy": a new type of speculative script driven by both coins and stocks?)

We have compiled a batch of stock price data for listed companies that achieve "coin-stock linkage" through the purchase of cryptocurrencies:

From the market performance perspective, the phenomenon of "buying coins leads to soaring prices" has happened many times. As long as the concept of "crypto assets" is put forward, short-term funds quickly flood in. However, after a short-term spike, many "coin-holding companies" face stock price corrections. If there is no continuous coin-buying action or other favorable news to keep stimulating, it is difficult to maintain the price increase.

Therefore, although the "buy coin" strategy can stimulate market enthusiasm in the short term, whether it can be transformed into a company's long-term competitiveness and sustainable growth remains uncertain. The market also finds it difficult to truly recognize those followers who merely gain attention by making one or two purchases or through vague "holding plans."

Are speculators starting to sell?

The story of "buying coins to raise valuation" continues to ferment, but some core players seem to be quietly cashing out.

Strategy, the proponent of this "infinite growth" theory, has seen its internal executives continuously sell off their shares of $MSTR. According to data from SecForm 4.Com, insiders at Strategy have entered a concentrated selling period since June 2023. Protos reports that in just the past 90 days, executives have cumulatively sold shares totaling 40 million dollars, with the number of sales being 10 times that of purchases.

Source: secform 4.com

"Solana version of MicroStrategy" Upexi is currently facing pressure, as the company previously raised $100 million to establish a Sol treasury. However, Upexi's stock plummeted 61.2% during trading yesterday, as investors registered to sell 43.85 million shares, equivalent to its total circulating shares in early April. (Related reading: SOL returns to $150, Upexi transforms into "Solana version of MicroStrategy", is unlimited growth about to begin?)

On the other hand, the stablecoin issuer Circle saw its stock price soar to nearly $300 after going public. However, Ark Invest, which had strongly supported it before the IPO, has been continuously reducing its holdings. It is reported that Ark Invest has sold Circle shares four times in a row, reducing its holdings by more than 36% in total.

When "buying coins" becomes a packaging, a market capitalization tool, or even a narrative shell to evade fundamental questioning, it is destined not to become the "key to passing" for all enterprises. Today's market is willing to pay for "financial allocation," while tomorrow's market may return to the genuine inquiry about growth and profitability.

Buy orders in the secondary market are not necessarily endorsements; more likely, they are chips for short-term speculative rotations.

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