Core logic review
ETH stock companies are popular primarily because of their 'money printing machine' model—using market hot money to boost their asset appreciation while achieving dual gains in stocks and cryptocurrency holdings, without taking on the risks of debt-to-equity conversion. This is similar to the logic of previous Bitcoin mining companies: the first wave of companies often significantly outperforms, but subsequent ones easily lag behind, just like the phenomenon of 'unchanged stock price, doubled market value' seen with ARB, essentially due to dilution from additional issuance.
Six key points of the game
1. Identify the leaders
Leading companies need to meet the characteristics of large holdings, low costs, and high market value. Such companies are more resilient to declines and have higher premium space, just like MicroStrategy previously led other mining stocks. Currently, SBET holds 1 billion USD in ETH, with a relatively low cost, but it remains to be seen whether its scale is the largest.
2. Judging the price trend of ETH
Currently, ETH is at the critical position of 4000 USD, with a large amount of trapped positions. If one believes ETH cannot rise, all ETH stocks should be avoided; companies that just started buying ETH at this point, due to high holding costs, face significant risks when prices decline.
3. Beware of the sustainability of liquidity and sentiment premiums
The surge of ETH stocks relies on the liquidity premium and market sentiment of US stocks. For example, last Friday, the trading volume of SBET reached 12.6 billion USD, creating a positive cycle between cashing out and increasing holdings. However, 4000 USD may be a critical point; once broken, the premium is likely to decline, and we need to be cautious of a disruption in the cycle.
4. Can crypto stocks outperform ETH?
The larger the market value, the harder it is to outperform; stock prices are often diluted by additional issuance (it is common for stock prices to remain unchanged while market value doubles). Additionally, the current financing model differs from MicroStrategy; MicroStrategy's debt-to-equity conversion brings leverage, and stock prices multiply with BTC's rise, while the new model may fall into a negative spiral if financing breaks.
5. Refer to 'Company Market Value / Crypto Assets (mNav)'
In a bull market, a company's market value is likely to be higher than the value of its held cryptocurrencies. Taking SBET as an example, if it holds 1 billion USD in ETH, when the company's market value approaches 1 billion USD (stock price around $11.2), it is a good buying opportunity.
6. Assess risks through options data
The higher the implied volatility (IV), the greater the market's expected fluctuation; the volume ratio of put options to call options can help assess market sentiment.
In summary, such games need to consider factors like the price trend of ETH, the company's fundamentals (holdings, costs, market value), and the sustainability of market premiums, particularly paying attention to the breakout situation at the critical position of 4000 USD to avoid entering at the peak of premiums.
