Suddenly, the most eye-catching thing in the US stock market no longer seems to be AI, but a bunch of companies on the verge of delisting. In recent months, the US capital market has been experiencing unprecedented large-scale reverse acquisition cases at an increasing amount.
Listed companies have completely abandoned their original core businesses, turning cryptocurrency into their fundamentals, causing stock prices to soar multiple times, even dozens of times, in a short time. Now, the US stock market has indeed become a playground for the crypto space to conduct financial experiments. This time, crypto VCs have really brought their story to Wall Street's ears.
In the US stock market, the 'firestarter' is setting off DAT fireworks.
Three months ago, when investing in Sharplink, Primitive Ventures had no idea that this new crypto track in the US stock market would become so crowded in such a short time. "At that time, not many people were discussing these investment cases, and it was nothing compared to the current market heat, but it was really only a month or two," said Primitive partner Yetta.
In June of this year, Sharplink Gaming announced the completion of a $425 million financing, becoming the first Ethereum reserve company in the US stock market. After the news was announced, the company's stock price surged, rising more than 10 times at one point. Primitive, as the only fund in the Chinese circle to participate in this investment case, attracted attention within the community.
"Because we found that liquidity in the crypto market is poor, while institutional buying power is very strong. The Bitcoin ETF volume has always been good, and the open interest in Bitcoin options on CME even exceeded that of Binance." In April last year, Primitive held a major review meeting internally, and thereafter established a new investment direction of 'fusion of CeFi (centralized finance) and DeFi (decentralized finance).' Now, they have become one of the busiest VC firms in the crypto space.
Now, Primitive receives emails daily from investment banks inviting the fund to participate in investments in crypto reserve companies. In this wave of investment, investment banks act as intermediaries, responsible for helping project parties find and coordinate all investors and assisting teams in roadshows for capital providers.
In the past month, Primitive has talked to no less than 20 cryptocurrency reserve projects. However, the projects they publicly invested in currently are only Sharplink and another company doing Litecoin reserves, MEI Pharma. This cautious investment approach stems from concerns about the overheated market; since May of this year, the team has been closely monitoring various top signals.
"We indeed feel that the level of market bubbles is significantly higher now than a few months ago," Yetta told Dongcha Beating. The team now prepares market reports daily and assesses suitable exit strategies based on the situation, "Crypto reserve companies are financial innovations; you can have a long-term bullish view on their underlying assets, but there is also a risk of severe deleveraging and bubble burst during market downturns."
Unlike Primitive, Pantera is rolling up its sleeves to get to work. This veteran crypto VC with a 12-year history even created a new term for this field—DAT (Digital Asset Treasury). In early July, Pantera established a new fund named 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. Recognizing this and responding quickly to seize early investment opportunities is crucial."
The story Pantera tells investors is very simple: if a company holds an increasing number of Bitcoins per share each year, owning stock in that company will give you more and more Bitcoin.
The underlying logic of Bitcoin reserve companies led by MicroStrategy and other cryptocurrency reserve companies is to raise funds through targeted issuance, convertible bonds, preferred stocks, and other financial instruments when the asset values of their cryptocurrencies exceed their market capitalizations, allowing them to acquire more crypto assets. Due to the premiums on stocks, 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 capabilities. "Clearly, the stock market is volatile; sometimes the market overestimates certain assets. At this point, initiating financial instruments for financing is essentially selling that volatility; from this perspective, the premium can actually be maintained in the long term," Cosmo told Dongcha Beating.
In April of this year, Pantera invested in Defi Development Corps (DFDV), which reserves the Solana native token SOL. This is the first company in the US stock market to use cryptocurrencies other than Bitcoin as reserve assets, and its stock price has risen over 20 times in the past 6 months.
However, for Pantera, this is definitely a contrarian investment, as no one was willing to invest in the project at the beginning; the company’s $24 million financing almost entirely came from Pantera.
Most members of DFDV come from senior positions at Kraken, and the CFO has also operated Solana verification nodes. The team's deep understanding of Solana and its professional level in traditional finance became key factors in impressing Pantera. "Nevertheless, we also set some downside protection measures in the transaction structure, but DFDV's astonishing success was something we completely did not anticipate."
"I believe the real catalyst is Coinbase being included in the S&P 500 index, which forces all fund managers around the world to consider cryptocurrency." Since Trump's election, the crypto industry has been making great strides in traditional capital markets, with Circle's IPO drawing global attention to stablecoins, and Robinhood's entry into RWA pushing security tokenization to the forefront. Now, DAT is becoming a new concept in the relay race.
Less than a month after investing in DFDV, Cantor Equity Partners also came knocking. The success of DFDV accelerated SoftBank and Tether's plans for a Bitcoin reserve company, ultimately raising about $300 million in external funding for CEP, with Pantera once again becoming its largest external investor.
The funding for investments in DFDV and CEP comes from Pantera's flagship venture fund (Venture Fund) and liquid token fund (Liquid Token Fund), and the team initially thought these would be the only two investments the fund would make in this field.
However, market developments quickly exceeded Pantera's expectations. Due to restrictions in investment portfolio frameworks and concentration for the aforementioned two funds, Pantera quickly decided to establish a new fund.
On July 1, the DAT Fund began raising funds with a target of $100 million. On July 7, the official announcement was made that the fundraising was completed. Due to the high enthusiasm of LPs, Pantera subsequently launched the fundraising for its second DAT Fund. By mid-month, when interviewed by Dongcha Beating, all funds from the first DAT Fund had already been deployed.
In publicly disclosed investment cases, Pantera often acts as the 'Anchor', meaning they are the largest investors. Due to the poor initial liquidity of the DAT company, it is prone to discount, at which point the team needs to bring in heavyweight investors off-market to build a foundational base, ensuring liquidity and narrowing the price gap.
On the other hand, 'Anchor Investor' is also a strategy for Pantera to market itself; "In the past two months, we have received nearly a hundred proposals from DAT companies. Pantera is usually the first call they make because we entered early enough to form cognitive leadership in this field, and they can see that when we invest, we are truly capable of making significant bets and daring to write big checks."
Of course, Pantera does not invest in every opportunity it encounters. For DAT companies, the fund also values their ability to create 'cognitive leadership' in market marketing. Much of its investment in Sharplink and Bitmine is based on this consideration. Among them, Bitmine was the first investment of the DAT Fund, and Pantera also played the role of 'Anchor' in the transaction.
On June 2, Ethereum community core figure Joseph Lubin led the successful completion of the reverse acquisition of Sharplink, marking the birth of the first Ethereum reserve company. On June 12, Joseph and other Ethereum core members released an Ethereum fundamentals report through Etherealize, introducing the investment value of Ethereum to institutions.
On June 30, the second Ethereum reserve company, Bitmine, was born, with 'Wall Street cryptocurrency expert' Thomas Lee coming forward to support it and frequently appearing in mainstream media to interpret investment opportunities in Ethereum. 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 up the financial leverage channel, the market value of DAT companies must reach at least $1 to $2 billion," Cosmo told Dongcha Beating, emphasizing that only by reaching this scale can companies truly obtain valuation premiums in the market and open another door to institutional capital through convertible bonds or preferred stocks.
But before that, DAT companies need to tell their story to ordinary investors, not just crypto-native investors, but to a broader mainstream retail investor group in the stock market. "They need to understand this story and be willing to participate. The market must first 'believe it will be realized' for the whole model to work."
Building ongoing trust with the market is another key factor in the success of the DAT company. The traditional financial market requires guarantees of 'transparency + discipline'; the team must be sufficiently 'Crypto Native', while also possessing the sharpness of traditional finance to manage and disclose information for listed companies, clearly understanding SEC rules and processes to ensure the company can efficiently and professionally access the US capital market.
"We spend a lot of time conducting due diligence; what truly matters is not the static number of mNav. Is there a clear management structure? Can financing be stabilized? Is there the ability to build a new business model? That is what makes a truly excellent 'DAT startup team.'"
In addition to reserves in Bitcoin, Ethereum, and Solana, Pantera has recently invested in several other large-cap altcoin reserve companies. From Bitcoin to mainstream coins to altcoins, the story told to investors in the crypto space is also layered: compared to Bitcoin, DAT relies entirely on financial engineering for growth; mainstream tokens can generate returns through staking and DeFi activities, while altcoin protocols have mature application scenarios and income as fundamentals in the crypto market, allowing stock market investors to gain exposure to their growth through DAT.
Different from the financing paths of Bitcoin and mainstream coins, many altcoin DAT's initial reserves come directly from the protocol foundation itself or its token investors.
Hyperliquid strategic reserve company Sonnet BioTherapeutics (SONN) had its initial reserves directly injected into the company by top crypto VC Paradigm, which purchased over 10 million HYPE at the end of last year. According to Dongcha Beating, the establishment of Ethena strategic reserve company StablecoinX was also led by the Ethena Foundation, and PIPE round investors can directly use their ENA tokens or USDC to participate in financing.
Due to poor liquidity, altcoin DATs often see rapid surges after financing news is announced, providing insider trading opportunities for many participants in the know. In the SONN case, the official announcement was released on July 14, but the stock price had already surged starting July 1, quadrupling by the night before the announcement.
Recently, the BNB reserve company CEA, backed by YZi Labs, encountered similar issues. According to Dongcha Beating, to prevent participants from knowing the company's name in advance, the team purchased several US shell companies in advance and randomly selected one at the last moment. However, even so, there were still instances of early leaks just hours before the official announcement on July 28.
On the other hand, many investors are also concerned about the potential risks of altcoin DATs having 'left hand and right hand' issues. Due to poor liquidity in the crypto market, large-cap, high-price tokens are difficult to exit without a discount. However, by injecting crypto assets into DAT companies, the false liquidity of the tokens themselves becomes real liquidity in the US stock market.
Therefore, whether to 'provide growth exposure' or 'find exit liquidity' still requires careful discernment by investors. "Many DATs choose to operate in regulatory gaps, such as being listed on low-threshold trading boards. But this short-term operation is difficult to establish stable information disclosure and compliance mechanisms; if they can't obtain real capital premiums, it’s merely passing the buck."
Regulation is also one of the risks faced by DAT companies; if the SEC classifies altcoins and other on-chain assets as securities, the structure of DAT will need significant adjustments. Nevertheless, Primitive and Pantera still believe this is a better battlefield, "because US stock market liquidity is indeed better, and listed company investors have more protections, so for us, investing in DAT now has better winning odds and payout ratios compared to pure Crypto investments," Yetta said.
The world outside the US stock market is still competing for 'the first MicroStrategy.'
The US stock market is the most efficient, inclusive, and liquid capital market, which is a consensus among investors. If one wants to replicate the next MicroStrategy, Nasdaq is still the best place. However, this does not mean that other capital markets lack opportunities; outside the US stock market, everyone aims to become the next Metaplanet.
In the past year, Metaplanet stock premiums have risen sharply, bringing investors returns of over 10 times. This 'Asian miracle' success has made more people see the opportunity for regional arbitrage.
The Asian market is a pioneer in Bitcoin reserves. In mid-2023, Waterdrop Capital partnered with China Pacific Insurance (Hong Kong) Co., Ltd. to establish the Pacific Waterdrop Fund, subsequently investing in the Hong Kong-listed company Boya Interactive, which has just started its Bitcoin purchasing plan. In 2024, MicroStrategy's stock rose sharply, further confirming this industry trend. Currently, Waterdrop has invested in 5 Hong Kong-listed companies and plans to invest in at least 10 by the end of the year.
"It's clear that the current US market for Bitcoin and mainstream coin reserve companies is already very crowded; the next increment is more likely to come from capital markets outside the US." Nachi, a crypto trader, is now also participating in the investment wave of reserve companies. This year, he invested in the Bitcoin reserve company Nakamoto Holdings and quickly received a 10-fold return.
At the beginning of the year, Nachi invested in Mythos Venture as a personal LP; this fund specializes in 'Asian Bitcoin reserves.' The most recent investment was in the Thai-listed company DV8, which recently announced the completion of a 241 million baht financing, becoming Southeast Asia's first Bitcoin reserve company.
In addition, he has also personally participated in several Bitcoin reserve project investments in other regions, mostly in seven-figure USD amounts. For example, in April this year, the first Bitcoin reserve company in Latin America, Oranje, completed its acquisition, supported by Brazil's largest commercial bank, Itaú BBA, raising nearly $400 million in its first round of financing.
"We feel that markets like Japan, South Korea, India, and Australia still have room to do this (Bitcoin reserve companies)." After joining Mythos, Nachi's role gradually shifted from LP to 'quasi-GP', looking at investment opportunities alongside other members. His task is to find publicly listed companies interested in acquisitions; 'shell owners' in the Asian region have become the focus of Nachi's recent meetings.
"Striving to be first" is key to winning in capital markets outside the US stock market. This not only allows teams to accumulate first-mover advantages but also helps companies capture more market attention. However, this also means that the regional arbitrage narrative of Bitcoin reserve companies is a race against time.
In the acquisition process, the differences between shell companies are significant; some can be bought for $5 million, while in the case of DV8 in Thailand, several participants spent about $20 million.
From shell buying to listing and trading, the entire process generally takes 1 to 3 months, with regulatory approval efficiency being the main variable. However, from finding opportunities to getting things done, it takes at least 6 months or even longer.
The acquisition of DV8 took nearly a year to complete, officially finalized only in July of this year. The main investors leading this acquisition are UTXO Management and Sora Venture, who are also the main architects behind Metaplanet.
Recently, Sora also planned and completed the acquisition of the South Korean software service company SGA. "The capital markets in Asia, especially Southeast Asia, are relatively closed, but the volume here is actually very large; many foreign investors are simply unaware of the activity level in these markets," said Luke, a partner at Sora Ventures, to Dongcha Beating.
"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 pose a significant barrier for many foreign capital sources; most VCs lack complete experience in acquisitions and communication with regulators and do not really understand the Asian market.
Sora Ventures' strategy is to bring in a large number of local partners to help connect with securities exchanges and regulatory agencies to accelerate the project landing process. In the SGA case in South Korea, the team took less than a month from the initial discussions to finalize the transaction, setting a record for the fastest acquisition in the history of the Korean Stock Exchange.
The company's financing rhythm and market strategy is another barrier. "mNav is a very late-stage valuation model; it only takes effect when Bitcoin accumulates to a certain amount. Early-stage companies have completely different strategies and premium logic compared to MicroStrategy." Thanks to the equity structure design like super voting rights, the US stock market DAT companies can ensure the team's control while continuously diluting equity.
However, Asian listed companies generally do not have such mechanisms, so the team's dilution space is relatively limited. This means that the team needs to accurately grasp the financing rhythm while buying back shares through cash flows from core businesses for reverse dilution. It is understood that Thailand's DV8 has obtained relevant local licenses and will soon start operations for a cryptocurrency trading platform.
Currently, Sora is accelerating the finalization of an acquisition deal in the Taiwanese market while advancing the second Bitcoin reserve company in Japan. In May this year, the team took a 90% stake in the Hong Kong luxury distribution company Top Win listed in the US, which will soon be renamed Asia Strategy. "Our goal is to create 9 to 10 'Metaplanet' companies in Asia and then integrate them into the US-listed parent company, allowing US stock market investors to indirectly gain exposure to the premium of Asian companies through us."
Top Win has participated in the acquisitions of several companies including Metaplanet, Hengyue Holdings, DV8, and SGA, and is about to complete its initial round of financing. Sora Ventures continues to adopt a 'multiple players + small funds' model, with total fundraising of less than $10 million and a 6-month lock-up period.
Luke hopes that Top Win will present a capital layout of 30% holding in Asian companies and 60% reserve in Bitcoin in the future, to tell investors a relatively different narrative. Of course, all of this is just the team's ideas and stories; whether the Asian market's premium is sustainable and whether US investors can buy into the Asian narrative remains to be verified by the market and time.
"It must be acknowledged that the Asian market has a high floor and a low ceiling; to achieve a certain scale, one can only do so in the US stock market, which attracts investors and players from around the world." Although investors attempt to chase the alpha of Bitcoin reserve narratives in various countries, all investors share a consensus that the beta sustaining everything still comes from the favorable driving force of US regulation.
"If legislation for national Bitcoin reserves and similar bills is truly implemented, the US government's purchasing actions will drive other regional governments and sovereign funds to allocate synchronously, and Bitcoin could continue to rise," Nachi said.
Saved by 'coin stocks'
Compared to the sluggish crypto market, the current DAT track seems particularly lively. This new wave not only captures attention but also seems to provide a 'lifeline' for capital trapped in the crypto space. "Now, all top 100 crypto projects by market cap are considering doing DAT," an investor told Dongcha Beating.
From the end of 2024 to early 2025, many crypto VC funds are set to expire, marking a crucial point for starting new fundraising rounds; however, poor DPI data has left many LPs hesitant. Since the beginning of the year, many crypto funds have gradually shut down.
Since 2022, the valuation of the primary market in the crypto field has continuously inflated; many projects can raise tens of millions of dollars in seed rounds, but very few have actual innovation and practical applications. With the development of cryptocurrency ETFs and FinTech + Crypto, VC has become the last choice for LPs to allocate crypto assets.
On the other hand, the shrinking liquidity in the market is also increasing the difficulty of exits for projects. Retail investors are no longer buying 'VC coins'; at the same time, projects need to pay high listing costs for 'going public'. "Now, listing on top trading platforms generally requires giving up at least 5% of the token quota; based on a market value of $100 million, that cost would be $5 million. Acquiring a shell company in the US costs about the same."
However, the openness of the US regulatory environment has given everyone new hope. Cryptocurrency reserve companies not only found the best exit channels for tokens but also provided a new storyline to attract institutional funds into the crypto space.
In addition to crypto VCs, midstream investment banks have also benefited from this wave. According to Bloomberg, DAT trading occupies 80% of many midstream investment banks' brokers' working time, and it is expected that business in this field will grow by 300% before the end of the year.
Now, 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 burst onto the scene.
According to Pantera's vision, the DAT field will see significant consolidation within three to five years. When the downward trend comes, small DAT companies that cannot achieve economies of scale will fall into negative premium dilemmas and be swallowed up by larger competitors at extremely low prices. "DAT is a 'new type of financial asset model experimental field,' not the center of technological innovation. Ultimately, only two or three companies will survive."
But now the music seems to have just begun, Cosmo believes that it will take at least another 6 months before the race heats up, "In the end, who will win is completely unknown, all we can do is support the teams we think have the potential to become one of the 'two or three' in the future."
