US-listed Companies are Rushing to “Buy the Dip” in Cryptocurrency - How Effective Will the Second Growth Curve Be?

Original Title: "U.S. Listed Companies Flock to 'Buy Coins,' How Effective Is the Second Growth Curve?"

Original Author: Fairy, ChainCatcher

"Buying Coins" has become a cheap and quick market capitalization booster in the stock market.

The trend of "Crypto Season" in the U.S. stock market is surging, where the main business of listed companies has become a backdrop, and digital assets have instead become a new market value engine.

However, the problem has become more acute: Will the market really continue to foot the bill for this valuation game disguised as buying coins?

Valuation Logic: How Does Buying Coins Affect Enterprise Value?

"Buying Coins" is like a valuation offset experiment woven together by emotion, liquidity, and narrative.

In traditional valuation frameworks, a company's market value comes from a comprehensive pricing of core variables such as its earnings capacity, balance sheet structure, growth potential, and free cash flow. However, in this round of the "Coin Buying Wave," companies leveraged their market valuation through "financial asset allocation" by holding cryptocurrency, leading to a repricing of their valuation in the market.

When a company includes Bitcoin or other mainstream cryptocurrencies on its balance sheet, the market's valuation of it is then attached with a premium multiplier based on the elasticity of cryptocurrency prices and expectations of liquidity. In other words, a company's market value stems not only from value creation but also from the leveraged amplification of the possibility of "coin price appreciation."

However, this structure almost places the "liquidity narrative" above the company's operations, turning financial allocation into the main axis of capital operations.

Short-Term Boost, Long-Term Still a Question Mark

Undeniably, entering into crypto does have the ability to stimulate stock prices in the short term. For example, take the case of the car trading service provider Cango, which announced in November 2023 its entry into Bitcoin mining and invested $400 million to acquire 50 EH/s of hashing power, causing its stock price to surge by 280%. Similarly, many companies with lackluster core business performance or even deep financial troubles have also attempted to seek revaluation in the capital markets by leveraging the "buying coins" narrative.

We have compiled a batch of stock price data from listed companies that achieved "Coin-Stock Linkage" through purchasing cryptocurrency:

From the market performance perspective, the phenomenon of "Buying Coins equals a meteoric rise" has been staged multiple times. As long as the "cryptocurrency" concept is pitched, short-term funds quickly flow in. However, after a short-term surge, many "holding coin companies" face stock price corrections. Without continued coin purchases or other positive news to sustain the momentum, the gains are difficult to maintain.

Therefore, while the "buying coins" strategy can ignite market enthusiasm in the short term, whether it can be transformed into the long-term competitiveness and sustainable growth of enterprises remains uncertain. The market also finds it challenging to truly recognize those trend followers who only seek attention through one or two coin purchases or a vague "coin holding plan."

Have Speculators Started Selling?

The story of "coin buying driving valuation" continues to brew, but some key players seem to have quietly taken profits.

Strategy, the originator of the "infinite growth" theory, has seen its internal executives consistently sell off shares of $MSTR stock. According to SecForm4.Com data, since June 2023, Strategy's insiders have entered a concentrated selling period. Protos reports that in just the past 90 days, executives have sold a total of $40 million in stock, with the number of sales being 10 times that of purchases.

Image Source: secform4.com

The "Sol Edition of MicroStrategy," Upexi, has also recently come under pressure, with the company previously raising $100 million to establish a Sol treasury. However, Upexi plummeted 61.2% intraday yesterday as investors registered to sell 43.85 million shares, equivalent to its total initial float in April.

On the other hand, stablecoin issuer Circle saw its stock price soar to nearly $300 post-listing. However, Ark Invest, which had been a strong supporter prior to its listing, has been continuously reducing its holdings. Reportedly, Ark Invest has sold off Circle stock four times in a row, reducing its position by over 36%.

When "buying coins" becomes a form of packaging, a market valuation tool, or even a narrative shell to bypass fundamental questioning, it is destined to not be the "golden key" for all enterprises. Today's market may be willing to pay for "financial configuration," but tomorrow's market may return to the real scrutiny of growth and profitability.

A buy order in the secondary market is not necessarily an acknowledgment; more likely, it is the chip rotation of short-term speculation.

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