Suddenly, the most eye-catching aspect of the US stock market seems to no longer be AI, but rather a bunch of struggling companies on the brink of delisting. Over the past few months, the US capital market has been undergoing a massive wave of increasingly larger reverse mergers at an unprecedented pace.

Publicly traded companies are completely abandoning their core businesses, turning cryptocurrency into their fundamentals, and seeing their stock prices skyrocketing several times or even tens of times within a short period. Now, the US stock market has become a playground for the crypto world to conduct financial experiments. This time, crypto VCs have truly brought the story to Wall Street's ears.

The US Stock Market, Where the "Rug Pullers" Set off Their Fireworks

When Primitive Ventures invested in Sharplink three months ago, they had no idea that this new crypto track in the US stock market would become so crowded in such a short time. "Back then, not many people were discussing these investment cases, and it's incomparable to the current market excitement, but it's really only been a month or two," said Yetta, a partner at Primitive.

In June of this year, Sharplink Gaming announced a $425 million financing round, becoming the first Ethereum reserve company in the US stock market. After the news was released, the company's stock price soared, surging over 10 times at one point. As the only Chinese-speaking fund participating in this investment case, Primitive attracted attention in the circle.

"Because we found that the liquidity in the crypto market was not good, but the buying power on the institutional side was very strong. The volume of Bitcoin ETFs has always been good, and the open interest on Bitcoin options on CME even exceeded that of Binance." In April of last year, Primitive held a major retrospective meeting internally, and since then, they have set a new investment direction of "CeFi (Centralized Finance) and DeFi (Decentralized Finance) integration." Now, they have become one of the busiest VCs in the crypto world.

Today, Primitive receives emails from investment banks every day, inviting the fund to participate in investments in crypto reserve companies. In this wave of investment, investment banks act as intermediaries organizing the process, responsible for helping the project team find and coordinate all investors, and assisting the team in roadshows for the investors.

In the past month, Primitive has discussed no fewer than 20 cryptocurrency reserve projects. However, the projects they have publicly participated in investing in are only Sharplink and another company doing Litecoin reserves, MEI Pharma. This cautious investment approach stems from concerns about an overheated market. Since May of this year, the team has been closely monitoring various top signals.

"We do feel that the current market bubble level is much higher than it was a few months ago," Yetta told BeatByte, the team now prepares daily market reports and judges the appropriate exit strategies based on the situation, "Crypto reserve companies are financial innovations; you can be long on their underlying assets for the long term, but there is also a risk of severe deleveraging and bubble bursting when the market goes down."

Unlike Primitive, Pantera is rolling up its sleeves and getting ready to make a big move. This well-established crypto VC firm, with 12 years of history, has even coined a new term for the field – DAT (Digital Asset Treasury). In early July, Pantera established a new fund, named the DAT Fund.

In the fundraising memorandum, Pantera partner Cosmo Jiang wrote: "As an investor, it is very rare to find oneself at the starting point of a new investment category, and realizing this and reacting quickly to take advantage of early investment opportunities is crucial."

Pantera's story to investors is very simple: If a company's Bitcoin Per Share amount grows every year, then holding shares of that company will allow you to accumulate more and more Bitcoin.

The underlying logic of Bitcoin reserve companies led by MicroStrategy and other cryptocurrency reserve companies is that, when the market value of the company exceeds the book value of its crypto assets, they use targeted issuance, convertible bonds, preferred stock, and other financial tools to raise funds from the market and buy more crypto assets. Due to the premium on their stock, companies can accumulate more assets at a lower cost.

Investors generally use the mNav indicator (Market Cap To Net Asset Value) to measure their premium multiplier to assess the company's financing ability. "Clearly the stock market is volatile, and sometimes the market will overvalue certain assets. At this point, using financial tools for financing is essentially selling this volatility, and from this perspective, the premium can actually be sustained in the long term," Cosmo told Beating.

In April of this year, Pantera invested in the SOL token reserve Solana blockchain project's Defi Development Corps (DFDV). This was the first US stock to use a cryptocurrency other than Bitcoin as a reserve asset, and its stock price has more than 20 times in the past 6 months.

However, for Pantera, this was definitely a contrarian investment, as at the beginning of the project, hardly anyone was willing to invest in it, and the company's $24 million in funding came almost entirely from Pantera.

Most members of DFDV come from the senior management of Kraken, with the CFO having also operated a Solana validator node. The team's in-depth understanding of Solana and their level of expertise in traditional finance became key factors that impressed Pantera. "Nevertheless, we have also put in place some downside protection measures in the trading structure, but the astonishing success of DFDV was something we had not anticipated at all."

“I believe the real catalyst was Coinbase being included in the S&P 500 Index, which forced fund managers worldwide to consider incorporating crypto. ” Since Trump's election, the crypto industry has made significant strides in the traditional capital markets, with the Circle IPO drawing global attention to stablecoins, Robinhood venturing into RWA, and tokenizing securities gaining momentum. Now, DAT is emerging as a new concept in this relay.

Having invested in DFDV less than a month ago, Cantor Equity Partners also came knocking. DFDV's success accelerated Softbank's and Tether's Bitcoin reserve company plan, ultimately leading to CEP raising around $300 million in external funds, with Pantera once again becoming its largest external investor.

The funds invested in DFDV and CEP come from Pantera's flagship Venture Fund and Liquid Token Fund. The team initially thought this would be the only two investments by the funds in this field.

However, the market's development quickly exceeded Pantera's expectations. Due to restrictions in the investment portfolio framework and concentration, Pantera quickly decided to establish a new fund.

On July 1, DAT Fund began fundraising with a target of $100 million. The fundraising was officially announced as completed on July 7. Due to high LP enthusiasm, Pantera subsequently started the fundraising for the second DAT Fund. By mid-month, in an interview with Beating, the first DAT Fund's funds had already been fully deployed.

In publicly disclosed investment cases, Pantera often acts as an "Anchor," meaning the highest contributor. Due to DAT Company's initial lack of liquidity, which can lead to discounts, the team needs to first bring in heavyweight investors off-exchange to build a base and ensure liquidity and narrow spreads.

On the other hand, being an "Anchor Investor" is also a strategy Pantera uses to dominate the market. “In the past two months, we have received nearly a hundred proposals from DAT companies. Pantera is usually their first call because we got in early, have established cognitive leadership in this field, and they also see that when we invest, we really put in big bets and are willing to invest significantly.”

Of course, Pantera does not invest in every opportunity that comes along. And for DAT companies, the funds also value their ability to create "cognitive leadership" through marketing. Their investments in Sharplink and Bitmine are largely based on this aspect. Bitmine is the first investment of the DAT Fund, with Pantera also playing the "Anchor" role in the transaction.

On June 2, Ethereum community key figure Joseph Lubin led the completion of the Sharplink reverse merger, giving birth to the first Ethereum reserve company. On June 12, Joseph and other Ethereum core members released an Ethereum fundamental report through Etherealize, introducing Ethereum's investment value to institutions.

On June 30, the second Ethereum reserve company, Bitmine, was established, with "Wall Street cryptocurrency expert" Thomas Lee making appearances and starting to frequently appear in mainstream media to interpret Ethereum's investment opportunities. During the same period, Sharplink's stock price began to rise, and the "Ethereum arms race" quickly became the hottest topic in the industry.

"To truly open the leveraged finance channel, DAT Company's market value must reach at least 10 to 20 billion US dollars," Cosmo told Action Beating, stating that only at this scale can a company truly obtain a valuation premium in the market and open another door to institutional capital through instruments such as convertible bonds or preferred shares.

However, before that, DAT Company needs to first tell the story to ordinary investors, not just native crypto investors, but the broader mainstream retail investor group in the stock market. "To make them understand this story and be willing to participate. The market must first 'believe it will happen' for the entire model to be established."

Building sustained trust with the market is another key factor in DAT Company's success. The traditional financial market requires the guarantee of "transparency + discipline." The team must be sufficiently "Crypto Native" while also possessing the acumen of traditional finance, excelling in public company information management and disclosure, understanding the SEC's rules and processes, ensuring that the company can efficiently and professionally access the US capital market.

"We will spend a lot of time doing due diligence. The static number mNav is not really important. Is there a clear management structure? Can financing be carried out stably? Is there a capability to build a new business model? That's what truly makes an outstanding 'DAT entrepreneurial team.'

In addition to Bitcoin, Ethereum, and Solana reserves, Pantera has recently invested in several other large-cap altcoin reserve companies. From Bitcoin to mainstream tokens to altcoins, the crypto industry's narrative to investors has evolved layer by layer: compared to Bitcoin, DAT relies entirely on financial engineering for growth, mainstream tokens can generate income through staking and DeFi activities, while altcoin protocols have mature application scenarios and revenue in the crypto market as fundamentals, allowing stock market investors to gain exposure to growth through DAT.

Unlike the fundraising path of Bitcoin and mainstream coins, many altcoin DATs have their initial reserves directly from the protocol foundation itself or its token investors.

The initial reserve of Hyperliquid's strategic reserve company Sonnet BioTherapeutics (SONN) is over 10 million HYPE tokens purchased by top crypto VC Paradigm at the end of last year, which were directly injected into the company. According to Dynamic Insight from Beating, the establishment of Ethena's strategic reserve company StablecoinX was also led by the Ethena Foundation, and PIPE round investors could directly participate in the fundraising using their ENA tokens or USDC.

Due to poor liquidity, altcoin DATs often experience a rapid surge in price shortly after fundraising news is announced, providing many insiders with insider trading opportunities. In the case of SONN, the official announcement was made on July 14, but the stock price started to soar from July 1, multiplying by four times by the eve of the announcement.

Recently, CEA, a BNB reserve company endorsed by YZi Labs, also encountered a similar issue. According to Dynamic Insight from Beating, to prevent participants from knowing the company name in advance, the team purchased several US shell companies in advance and randomly selected one at the last minute. However, even so, there was still a front-running situation in the hours leading up to the July 28 announcement.

On the other hand, many investors are also concerned about the potential risk of "crossing hands" in altcoin DATs. Due to the poor liquidity of the crypto market, high market cap, high-priced tokens are difficult to exit without a discount. However, by injecting crypto assets into DAT companies, the token's false liquidity has become real liquidity in the US stock market.

Therefore, whether it is "providing growth exposure" or "seeking exit liquidity," investors still need to carefully distinguish. "Many DATs choose to operate in regulatory blind spots, such as listing on low-threshold trading boards. However, this short-term operation makes it difficult to establish stable information disclosure and compliance mechanisms. If true capital premium cannot be obtained, it's just a game of passing the buck."

Regulation is also one of the risks that DAT companies face. Once the SEC classifies altcoins and other on-chain assets as securities, the structure of DATs will need significant adjustments. However, even so, Primitive and Pantera still believe this is a better battlefield, "because US stock liquidity is indeed better, and public company investors have more protection, so for us, investing in DAT now will have a better win rate and odds than purely crypto investments," Yetta said.

Beyond the US Stock Market, Racing Towards the "First Microstrategy"

The US stock market is considered the most efficient, inclusive, and liquid capital market, which is a consensus among investors. If anyone wants to replicate the next Microstrategy, Nasdaq is still the best place to be. However, that doesn't mean other capital markets don't have opportunities. Outside the US stock market, the goal is to become the next Metaplanet.

Over the past year, Metaplanet's stock price premium has been soaring, delivering over 10x returns to investors. This "Asian miracle" style success has enabled more people to see the opportunity for regional arbitrage.

The Asian market has been a pioneer in Bitcoin reserves. In mid-2023, Shui Capital collaborated with China Taiping Investment Management (Hong Kong) Limited to establish the Pacific Shui Fund, which then invested in Agile Group, a Hong Kong-listed company that had just started a Bitcoin purchase plan. In 2024, Microstrategy's stock price surged, further confirming this industry trend for Shui. Currently, Shui has invested in 5 Hong Kong-listed companies and plans to invest in at least 10 before the end of the year.

"Clearly, the current US market for Bitcoin and mainstream coin reserve companies is already very crowded, and the next wave of growth is more likely to come from capital markets outside the US." Nachi, a crypto trader, is now involved in the reserve company investment wave. This year, he participated in an investment in Nakamoto Holdings, a Bitcoin reserve company, and quickly made a 10x return.

At the beginning of the year, Nachi invested as an individual LP in Mythos Venture, a fund specializing in "Asian Bitcoin reserves." His most recent investment was in DV8, a Thai-listed company that recently announced raising 241 million Thai baht and became the first Bitcoin reserve company in Southeast Asia.

In addition, he has personally participated in several other regional Bitcoin reserve project investments, with most amounts in the seven-figure USD range. For example, in April of this year, he completed the acquisition of Oranje, the first Bitcoin reserve company in Latin America. This project received support from Brazil's largest commercial bank Itaú BBA and raised nearly $400 million in its first round of funding.

"We believe that markets such as Japan, South Korea, India, and Australia still have room to establish Bitcoin reserve companies." After joining Mythos, Nachi's role has gradually transitioned from LP to "quasi-GP," scouting for investment opportunities with other members. His task is to find publicly listed companies interested in acquisition, with the "shell owners" in the Asian region being the recent intense meeting targets for Nachi.

Being the first mover is key to succeeding in capital markets outside of the US stock market. This not only allows the team to accumulate a first-mover advantage but also helps the company capture more market attention. However, this also means that the narrative arbitrage of Bitcoin reserve companies is a race against time.

In the acquisition process, there is a significant difference between shell companies, with some companies being acquired for as little as $5 million, while in the case of DV8 in Thailand, several parties spent around $20 million.

From acquiring a shell to listing, the entire process usually takes 1 to 3 months, with regulatory approval efficiency being the main variable. However, from identifying the opportunity to execution, it takes at least 6 months or even longer.

The DV8 acquisition took nearly a year from start to finish, only officially completing in July of this year. The main financiers leading this acquisition were UTXO Management and Sora Venture, who are also the key architects behind Metaplanet.

Recently, Sora also planned the acquisition of the South Korean listed software service company SGA. "The Asian, especially Southeast Asian, capital markets are relatively closed, but the volume here is actually very large; it's just that many foreign investors do not understand the level of activity in these markets," Luke, a partner at Sora Ventures, told Beating insight.

"Now everyone is racing against time, but in the Asian market, I believe very few can compete with Sora." In Luke's view, local regulations are a major barrier for many overseas capital investors, with most VCs lacking the experience of full participation in acquisitions and regulatory communication, and thus not fully understanding the Asian markets.

Sora Ventures' strategy is to introduce a large number of local partners to help connect with stock exchanges and regulatory bodies to accelerate the project's landing process. In the case of SGA in South Korea, the team took less than a month from the start of negotiations to the finalizing of the deal, setting the fastest acquisition record in the history of the South Korean Stock Exchange.

The company's financing pace and market strategy pose another barrier. "mNav is a late valuation model that only comes into play when Bitcoin has accumulated to a certain amount. Early-stage companies have a completely different strategy and premium logic from MicroStrategy." Thanks to equity structure designs like super-voting rights, the US stock market company DAT can maintain team control even as equity is continuously diluted.

However, Asian listed companies generally do not have such a mechanism, so the team's dilutable space is relatively limited. This means the team needs to accurately grasp the financing pace while also repurchasing stocks through core business and other cash flows to achieve reverse dilution. It is understood that DV8 in Thailand has obtained relevant local licenses and will soon launch a cryptocurrency trading platform.

Currently, Sora is accelerating the finalization of an acquisition deal in the Taiwanese market while advancing its second Bitcoin reserve company in Japan. In May of this year, the team acquired a 90% stake in the US-listed Hong Kong luxury goods distribution company Top Win, which will soon be renamed Asia Strategy. "Our goal is to create 9 to 10 'Metaplanets' in Asia and then integrate them into a US-listed parent company, allowing stock market investors to indirectly access the premium exposure of Asian companies through us."

Top Win has been involved in the acquisition of several companies, including Metaplanet, Hengyue Holdings, DV8, and SGA. The company is also set to complete its seed round of funding soon. Sora Ventures continues to follow a "multi-player + small funds" model, with a total fundraising amount of less than $10 million and a 6-month lock-up period.

Luke hopes that in the future, Top Win will have a capital allocation of 30% in Asian companies and 60% in Bitcoin reserves to present a different narrative to investors. Of course, all of this is just the team's vision and story. Whether the premium in the Asian market is sustainable and whether US stock market investors will buy into the Asian narrative remain to be seen and will require validation by the market and time.

"It must be acknowledged that the Asian market has a low floor and a low ceiling. To achieve a certain scale, it can only be done in the US stock market, which attracts investors and players from around the world." Although investors are trying to chase the Alpha of the Bitcoin reserve narrative in various countries, all investors have a consensus that the Beta that underpins everything still comes from the favorable regulations of the US government.

"If laws regarding Bitcoin national reserves are really enacted, the US government's purchasing behavior will drive other regional governments and sovereign wealth funds to synchronously allocate. It is possible for Bitcoin to keep rising," Nachi said.

The Person Saved by "Coin Stocks"

Compared to the bleak crypto market, the current DAT track appears particularly lively, capturing attention and seemingly providing a "way out" for capital trapped in the crypto sphere. "Now, the top 100 cryptocurrency projects by market cap are all considering doing DAT," a investor told Dynamics Beating.

From the end of 2024 to the beginning of 2025, as most crypto VC funds reach maturity and enter a critical phase of fundraising, the dismal DPI data has caused many LPs to hesitate. Since the beginning of the year, many crypto funds have shut down.

Since 2022, primary market valuations in the crypto space have continued to inflate, with many projects raising tens of millions of dollars in the seed round, but very few actually demonstrating innovation and real-world use cases. With the development of cryptocurrency ETFs and the FinTech+Crypto field, VCs have become the last choice for LPs to allocate crypto assets.

On the other hand, the shrinking market liquidity is also increasing the difficulty of project exits. Retail investors are no longer buying into "VC coins," while projects still need to pay a high listing cost for exchanges. "Nowadays, to list on a top-tier trading platform, you generally need to give up at least 5% of your token supply. Based on a $100 million market cap, the cost is $5 million. To list a shell company on the US stock market costs about the same."

However, the open regulatory environment in the United States has given everyone a new hope. Cryptocurrency treasury companies have not only found the best exit routes for tokens but have also provided a new narrative to attract institutional funds to the crypto space.

In addition to crypto VC firms, mid-tier investment banks have also benefited from this trend. According to Bloomberg, DAT trading now occupies 80% of many mid-tier investment bankers' time, with business in this area expected to grow by 300% by the end of the year.

Today, the industry is eager to move the $2 trillion cryptocurrency market into the US stock market. In less than two months, dozens of DAT companies have sprung up in the market.

According to Pantera's vision, the DAT sector will undergo significant consolidation in three to five years. When the downward trend arrives, small DAT companies unable to achieve economies of scale will face a discount dilemma and be acquired by larger competitors at very low prices. "DAT is a 'new financial-asset model experiment,' not a center of technological innovation. In the end, only two to three companies will survive."

However, it seems like the music has just started playing. Cosmo believes there is at least another six months before the race intensifies, "The ultimate winner is entirely unknown, and all we can do is support the teams that we believe could be one of the 'two to three' in the future."

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