"Coin-Stock Linkage" Carnival: When Buying Coins Becomes a Quick Remedy for Listed Companies' Market Capitalization

Written by: Fairy, ChainCatcher

Editor: TB, ChainCatcher

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

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

But the problem is becoming more 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" is like an experiment in valuation shift woven together by emotions, liquidity, and narrative.

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

When companies incorporate Bitcoin or other mainstream crypto assets into their balance sheets, the market assigns a premium multiple to their valuation based on the expected price elasticity and tradability of the crypto assets. In other words, a company's market value is derived not only from value creation but also from a leveraged amplification of the possibility of "rising coin prices."

But this structure almost places "liquidity narrative" above business 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 indeed 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 dollars to acquire 50 EH/s of computing power, which immediately caused its stock price to soar by 280%. 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 market by leveraging the "buying coins" narrative.

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, the phenomenon of "buying coins and seeing a surge" has occurred multiple times. As long as the concept of "crypto assets" is put forward, short-term funds quickly pour in. However, after a short-term spike, many "holding companies" face stock price corrections. Without continuous coin purchases or other positive news to sustain the momentum, the increase is difficult to maintain.

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 sustained growth remains uncertain. The market also finds it difficult to truly recognize those followers who merely seek attention through one or two coin purchases or vague "holding plans."

Are speculators starting to sell?

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

Strategy, the proponent of the "Infinite Growth" theory, has seen its internal executives continuously reduce their holdings of $MSTR stock. According to data from SecForm4.Com, insiders at Strategy have entered a concentrated selling period since June 2023. Protos reports that in just the past 90 days, executives have sold a total of $40 million worth of stock, with the number of sales being 10 times the number of purchases.

Image source: secform4.com

"Sol-based Microstrategy" Upexi is also facing pressure recently, as the company previously raised $100 million to establish the Sol treasury. However, Upexi's stock plummeted by 61.2% during trading yesterday, as investors registered to sell 43.85 million shares, equivalent to its total circulating shares at the beginning of April.

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 its listing, 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 value tool, and even a narrative shell to evade fundamental questioning, it is destined to not become the "key" for all enterprises. Today's market is willing to pay for "financial allocation," while tomorrow's market may return to the real inquiry of growth and profitability.

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