U.S. listed companies gather to "buy coins", what is the effect of the second growth curve?

Original author: Fairy, ChainCatcher

Original editor: TB, ChainCatcher

"Buying coins" has become a cheap and fast way to raise the market value in the stock market.

The "copycat season" of U.S. stocks is rolling, the main business of listed companies has become a foil, and digital assets have become a new market value engine.

But the question is also becoming more and more acute: will the market really keep paying for this valuation game in the name of borrowing?

Valuation Logic: How Does Buying Crypto Affect Enterprise Value?

"Buying coins" is like an experiment in valuation shift, where emotion, liquidity, and narrative are intertwined.

In the traditional valuation framework, a company's market capitalization is derived from the combined pricing of its core variables, such as profitability, asset-liability structure, growth potential, and free cash flow. However, in this round of "buying coins", companies have leveraged the market's repricing of their valuations by holding crypto assets.

When companies add Bitcoin or other major crypto assets to their balance sheets, the market values them with premium multiples based on the crypto asset's price elasticity and expectations of tradeability. In other words, the market value of a company comes not only from value creation, but also from the leveraged amplification of the possibility of "currency price increase".

However, this structure almost puts the "liquidity narrative" above the operation of the enterprise, and alienates the financial allocation as the main axis of capital operation.

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

There's no denying that the foray into crypto does have the ability to stimulate stock prices in the short term. For example, Cango, a car trading service, announced its entry into Bitcoin mining in November 2023, spending $400 million on 50 EH/s of computing resources, and its stock price soared 280%. Similarly, there are many companies with lackluster main business performance and even deep financial difficulties, which are also trying to seek revaluation in the capital market with the help of the "buy coin" narrative. (Related reading: ETH, SOL version of "micro-strategy" tide: a new hype script driven by the two-wheel drive of currency stocks?) ）

We have compiled the stock price data of a number of listed companies that have achieved "currency and stock linkage" through the purchase of cryptocurrencies:

Judging from the market performance, the phenomenon of "buying coins and skyrocketing" has been staged many times. As long as the concept of "crypto assets" is played, short-term funds will quickly pour in. However, after the short-term surge, many "coin-holding companies" are facing stock price corrections, and it is difficult to sustain the gains without continuous coin purchases or other positive news to continue to stimulate.

Therefore, although the "buy crypto" strategy can stimulate market enthusiasm in the short term, it is still uncertain whether it can be translated into long-term competitiveness and sustainable growth of enterprises. It is also difficult for the market to truly recognize those who have attracted attention with only one or two purchases or vague "coin holding plans".

Speculators are starting to sell?

The story of "buying coins to pull valuation" continues to ferment, but some core players seem to be quietly taking profits.

Strategy, the author of this "infinite growth" theory, has been reducing its holdings of $MSTR in its internal executives. According to SecForm 4.Com data, Strategy insiders have entered a concentrated sell-off period since June 2023. In the past 90 days alone, executives have sold $40 million in shares, 10 times more than they bought, according to Protos.

Source: secform 4.com

Upexi, the "Sol version of the microstrategy," has also been under pressure recently, after raising $100 million to set up a Sol treasury. However, Upexi plunged 61.2% intraday yesterday as investors registered to sell 43.85 million shares, equivalent to its total initial outstanding shares in April. (Related reading: SOL is back to $150, Upexi is the "Solana version of microstrategy", and unlimited growth is about to begin?) ）

On the other hand, stablecoin issuer Circle saw its share price soar to nearly $300 after its listing. However, Ark Invest, which was strongly supported before its listing, continues to reduce its holdings. It is reported that Ark Invest has sold Circle shares four times in a row, reducing its holdings by more than 36% cumulatively.

When "buying coins" becomes a kind of packaging, a market value tool, and even a narrative shell that avoids the torture of fundamentals, it is also destined to fail to become the "key to clearance" for all enterprises. Today's market is willing to pay for "financial allocation", while tomorrow's market may return to the real question of growth and profitability.

The purchase order in the secondary market is not necessarily an endorsement; More likely, it is a short-term speculation chip rotation.

Link to original article