30 U.S. publicly listed companies follow the "MicroStrategy effect": small and mid-cap stocks become the main force in crypto reserves, with an average stock price increase of 438%

Author: Nancy, PAnews

As traditional crypto strategies like rebranding and buybacks gradually lose effectiveness, a more capital-driven model of coin stocks is beginning to emerge, even becoming a new narrative engine for crypto projects.

From finance to technology, from healthcare to entertainment, an increasing number of publicly listed companies are following the path of MicroStrategy, incorporating crypto assets like BTC, ETH, SOL, and TRX into their balance sheets, initiating a capital game of valuation repricing. This article by PANews compiles statistics from 30 U.S. listed companies that have officially announced crypto reserve plans.

From Financial Strategy to Valuation Logic: Small and Mid-Cap Companies Replicate the "MicroStrategy Effect"

As a pioneer of the coin stock strategy, MicroStrategy was the first to incorporate Bitcoin into its balance sheet back in August 2020, a radical move that was then seen as an alternative financial experiment. However, five years later, this once niche strategy is evolving into a mainstream narrative path that cross-industry companies are eager to imitate. More and more businesses, especially small and mid-cap publicly listed companies, are beginning to include crypto assets in their reserve systems, attempting to reconstruct their valuation logic through "crypto reserves + capital market leverage."

From the 30 U.S. listed companies currently compiled, in addition to tech and fintech companies represented by MicroStrategy, BTCS, and DeFi Technologies, traditional industries such as healthcare, biopharmaceuticals, e-commerce, education, new energy vehicles, agricultural trade, and entertainment media are also gradually incorporating crypto assets into their asset allocation.

These companies mostly face common challenges such as sluggish main business growth, stagnant valuations, and insufficient liquidity, exemplified by SharpLink Gaming, Semler Scientific, Kindly MD, Quantum BioPharma, and Silo Pharma. In the context of obstacles in traditional paths, deploying crypto assets serves as both a financial strategy and an attempt to reshape capital market narratives. For instance, SharpLink Gaming, which was on the verge of delisting due to underperformance, announced Ethereum as its primary reserve asset by the end of 2024, quickly securing a financing agreement of up to $425 million, leading to a sharp increase in market attention and a surge in market capitalization from $2 million to tens of millions, completely reconstructing its valuation logic.

Currently, the reserve structure of crypto assets still relies heavily on Bitcoin. According to statistics, about 20 listed companies have explicitly included BTC in their asset baskets, including MicroStrategy, GameStop, Trump Media, Rumble, Next Technology Holding, and Cantor Equity. Ethereum is gradually becoming the second most popular reserve asset, with companies like BTCS, Treasure Global, and SharpLink Gaming choosing to allocate ETH. Some companies opt for a more diversified asset combination strategy, such as DeFi Technologies, Siebert Financial, and Interactive Strength, constructing a mixed crypto reserve through Bitcoin, Ethereum, and other tokens, or seeking a balance between risk resistance and market speculation potential.

In terms of time dimension, although MicroStrategy initiated its Bitcoin reserve in 2020, there were few responders in the following years. It wasn't until the fourth quarter of 2024, when Bitcoin prices returned to high levels, that MicroStrategy's stock price surged significantly, driving the returns of its coin stock model to skyrocket, marking the onset of an intensive outbreak of crypto reserves.

Most of the following companies have market capitalizations concentrated in the range of $100 million to $1 billion, with reserve targets ranging from millions to billions of dollars. MicroStrategy's Bitcoin reserve target is as high as $10 billion, Cantor Equity aims for $3 billion, and Trump Media targets $2.5 billion. Notably, some companies have reserve targets that far exceed their market capitalization, creating a significant risk leverage effect. While this can stimulate market speculation expectations, it also exacerbates the risk of valuation bubbles.

From stock price performance, most companies experienced a short-term explosive increase after announcing their reserve plans, with an average maximum increase of 438.53%. Among them, MicroStrategy saw an intraday maximum increase of 4315.85% since its first announcement; Asset Entities reached 2096.72%; SharpLink Gaming hit 1747.62%; and Kindly MD achieved 791.54%. However, there are also many companies whose stock prices changed little, such as SIEB, SILO, and DTCK, indicating that the market may lack confidence in their ongoing execution capabilities and narrative credibility.

Of course, beyond the reserve actions themselves, some companies further amplify their market effects by gaining strategic support from crypto giants or well-known capital. For example, SharpLink Gaming has strategically partnered with renowned institutions like ConsenSys, gaining endorsement from the Ethereum ecosystem; Cantor Equity Partners merged with Twenty One Capital and launched a BTC reserve strategy, supported by Tether, SoftBank, and U.S. Commerce Secretary's son Brandon Lutnick; SRM Entertainment plans to use TRX as its core reserve asset and announced support from TRON founder Justin Sun, with its trading volume on June 17 even surpassing that of Alibaba and Tencent. This infusion of crypto background provides companies with ecological discourse power beyond financial allocation, enhancing the linkage between their on-chain assets and capital markets.

It is evident that more and more publicly listed companies are no longer satisfied with merely incorporating mainstream crypto assets like Bitcoin and Ethereum into their balance sheets but are starting to allocate emerging crypto assets like XRP, SOL, TRON, and HYPE. In the future, crypto projects may lobby or seek to establish reserves with publicly listed companies, becoming a new trend.

Overall, the collective influx of listed companies into the crypto reserve field appears to be an acknowledgment of crypto assets, but behind it lies a skilled application of capital market mechanisms. Especially in the context of weak performance and limited market capitalization, popular strategies like coin stocks can significantly reshape their valuation logic. In the short term, this provides many small and mid-cap companies with new financing paths and narrative outlets; in the long term, the sustainability of corporate reserve structures, asset appreciation, and transparency of on-chain behavior will be key factors determining whether this trend can develop healthily.

Eating into the "Cake" of Public Companies? Market Risks and Manipulation Controversies Run Parallel

As the trend of companies incorporating crypto assets into their balance sheets spreads rapidly, it has also sparked widespread controversy in the market regarding risk management, market manipulation, and institutional adaptability.

Bitcoin advocate and CEO of Bitcoin Magazine, David Bailey, views this trend as a paradigm shift in capital structure. He bluntly states, "Whenever one of our Bitcoin treasury reserve companies is added to an index, a traditional company that does not hold Bitcoin gets kicked out. Sorry, your liquidity has now turned into Bitcoin liquidity. Join or be eliminated."

Blockstream CEO Adam Back has also issued a similar warning, "Bitcoin treasury reserve companies are continuously eating into the cake of publicly listed companies. If you ignore this century's biggest arbitrage opportunity, the reallocation of capital will ultimately leave you behind. This is not really an 'option.'"

Haseeb Qureshi, managing partner at Dragonfly, believes that in every market cycle, founders chase the flow of hot money. In the last cycle, issuing tokens was the hot trend due to the exceptionally active crypto capital market; in this cycle, introducing tokens into the stock market (similar to the financial company model) has become the new trend. He points out that hot money never stays in one place for long, which is also why financial companies will not become the final model, but he expects this trend to continue for another 1-2 years until the heat dissipates.

Regarding the risk management of crypto reserve companies, MicroStrategy CEO Michael Saylor advises, "Publishing on-chain reserve proofs is not a good idea." He points out that publicly disclosing wallet addresses may pose long-term tracking risks for institutions. Without disclosing liabilities audited by the Big Four accounting firms, standalone reserve information is meaningless.

Binance founder CZ also emphasized on social media, "These companies are taking risks. Every company will take risks. Risk is not a binary state like 0 or 1. Risk is a range from 0 to 100. As long as you find the right balance, you can achieve the best risk/investment return ratio that suits you. Risks can/must be managed. Not taking risks is also a risk."

Coinbase CEO Brian Armstrong revealed in a Q&A that he had considered allocating up to 80% of the balance sheet to Bitcoin but ultimately decided against this radical plan, "because that could ruin the company." He explained that in the early stages, if the BTC price suddenly drops, the company's funding runway could shrink from 18 months to 10 months, affecting financing and business development. He further pointed out that the company does hold Bitcoin on its balance sheet, with about 25% of its net cash held in crypto. "We won't put 80% into it; I think that's too risky."

For some small and mid-cap listed companies announcing large reserve allocations to altcoins, Matthew Sigel, head of digital assets at VanEck, pointed out that these companies claim to purchase tokens worth hundreds of millions of dollars (like XRP and SOL), and these so-called reserve plans are likely just a means to inflate the stock prices of small-cap companies, many of which are traded on Nasdaq. "Many are insiders trying to pump and dump; if the market cap is negligible and there are no new investors disclosed, I would consider this a scam."

Regarding the expansion of this leverage model, digital asset bank Sygnum warned in its latest report that companies like MicroStrategy are continuously increasing their Bitcoin holdings through leveraged methods such as issuing bonds, deviating from traditional corporate financial strategies. This practice may undermine Bitcoin's applicability as a central bank reserve asset, and excessive centralized holdings could lead to decreased market liquidity and increased price volatility, thereby affecting the willingness of institutions like central banks to allocate.

Early Bitcoin advocate Max Keiser also expressed skepticism about emerging Bitcoin financial companies mimicking the MicroStrategy model, arguing that they have not yet undergone a true bear market test. He emphasized, "Saylor never sold Bitcoin during a bear market; he kept buying. Only those companies that maintain their positions during the toughest market moments can truly be called believers in Bitcoin treasuries."

In summary, crypto assets are rising from financial reserves to corporate strategy, but the success or failure of the strategy ultimately rests with the market.