Written by: Rhythm BlockBeats
Suddenly, what seems to attract the most attention in the US stock market is no longer AI, but a bunch of junk companies on the verge of delisting. In recent months, the US capital market has seen an unprecedented speed of large-scale reverse mergers with increasing amounts.
Publicly traded companies have completely abandoned their original main businesses, turning cryptocurrency into their fundamentals, and their stock prices have skyrocketed several times or even dozens of times in a short period. Now, the US stock market has become a playground for the crypto circle to conduct financial experiments. This time, the crypto VC truly brought the 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 never expected that this new cryptocurrency 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; it can't be compared to the current market heat, but it was really just a month or two ago," said Primitive partner Yetta.
In June of this year, Sharplink Gaming announced the completion of $425 million in financing, becoming the first Ethereum reserve company listed in the US stock market. Following the announcement, the company's stock price soared, rising more than tenfold at one point. Primitive, as the only fund from the Chinese circle participating in this investment case, attracted attention within the community.
"Because we found that liquidity in the crypto market is not good, yet institutional purchasing power is very strong; Bitcoin ETF volumes have always been good, and the open interest in Bitcoin options on CME even exceeds that on Binance." In April last year, Primitive held a major internal review meeting and subsequently set a new investment direction of "merging CeFi (centralized finance) and DeFi (decentralized finance)." Now, they have become one of the busiest VCs in the crypto space.
Nowadays, Primitive receives daily emails from investment banks inviting the fund to participate in investments in crypto reserve companies. In this investment wave, investment banks act as intermediaries, helping project parties find and coordinate all investors and assisting the team in conducting roadshows for funders.
In the past month, Primitive has discussed no fewer than 20 cryptocurrency reserve projects. However, currently, the only projects that they publicly participate in investing are Sharplink and another company that reserves Litecoin, MEI Pharma. This cautious investment approach stems from concerns about the overheated market; since May of this year, the team has begun closely monitoring various top signals.
"We do feel that the current level of market bubble is significantly higher than it was a few months ago," Yetta told Beating Insight. The team now produces market reports daily and judges suitable exit strategies based on the situation, "Crypto reserve companies are financial innovations; you can be bullish on their underlying assets in the long term, but there is also the risk of severe deleveraging and bubble bursting during market downturns."
Unlike Primitive, Pantera is rolling up their sleeves and preparing to make a big move. This veteran crypto VC with 12 years of history has even coined a new term for this field: DAT (Digital Asset Treasury). In early July, Pantera established a new fund and named it 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 every year, owning the company's stock will allow you to accumulate more and more Bitcoins.
The underlying logic of Bitcoin reserve companies led by MicroStrategy, as well as other cryptocurrency reserve companies, is to finance in the market through financial instruments such as directed issuance, convertible bonds, and preferred stocks when there is a premium on the value of their crypto assets relative to their market capitalization, thus allowing the company to accumulate more assets at a lower cost.
Investors generally use the mNav indicator (Market Cap To Net Asset Value) to measure their premium multiples to assess the company's financing capacity. "It's obvious that the stock market is volatile; sometimes the market overvalues certain assets. In such cases, launching financial instruments to raise funds is essentially selling this volatility. From this perspective, the premium can actually be sustained in the long term," Cosmo told Beating Insight.
In April this year, Pantera invested in the Defi Development Corps (DFDV) that reserves the Solana public chain token SOL, making it the first US stock company to use cryptocurrencies other than Bitcoin as reserve assets, with its stock price having risen more than 20 times in the past six months.
However, for Pantera, this was definitely a contrarian investment, as initially, no one was willing to invest in the project, with the company's $24 million financing almost entirely coming from Pantera.
Most members of DFDV come from senior positions at Kraken, and the CFO has also operated Solana validation nodes. The team's deep understanding of Solana and proficiency in traditional finance became key factors that impressed Pantera. "Even so, we still set some downside protection measures in the transaction structure, but DFDV's astonishing success was completely unexpected for us."
"I believe the real catalyst was Coinbase being included in the S&P 500 index, which forced all fund managers worldwide to consider including crypto in their considerations." Since Trump's election, the crypto industry has been soaring in traditional capital markets. Circle's IPO has attracted global attention to stablecoins, and Robinhood's entry into RWA has brought tokenization of securities to the forefront. Now, DAT is becoming a new concept in this relay.
Less than a month after investing in DFDV, Cantor Equity Partners also came knocking. DFDV's success accelerated SoftBank's and Tether's plans for Bitcoin reserve companies, ultimately raising about $300 million in external funding through CEP's private placement, with Pantera once again becoming its largest external investor.
Investments in DFDV and CEP came from Pantera's flagship venture capital fund and liquidity token fund. The team initially thought these would be the only two investments in this field.
But the market's development quickly surpassed Pantera's expectations. Due to limitations in investment portfolio frameworks and concentration for the two funds mentioned above, Pantera quickly decided to establish a new fund.
On July 1, DAT Fund began fundraising with a target of $100 million. On July 7, the official announcement of fundraising completion was made. Due to high enthusiasm from LPs, Pantera subsequently launched fundraising for a second DAT Fund. By mid-month, when Beating Insight interviewed them, the funds from the first DAT Fund had already been fully deployed.
In publicly disclosed investment cases, Pantera often plays the role of "Anchor," being the largest investor. Since DAT companies initially have poor liquidity, which can lead to discounts, the team needs to bring in heavyweight investors off-market to build a foundation, ensuring liquidity and narrowing the price spread.
On the other hand, the "Anchor Investor" is also a strategy for Pantera to penetrate the market. "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 gain a cognitive lead in this field, and they see that we are investors who can truly place substantial bets and make large commitments when we fund them."
Of course, Pantera does not invest in every opportunity it encounters. For DAT companies, the fund also values their ability to create "cognitive leads" in market marketing. Its investments in Sharplink and Bitmine are largely based on this consideration. Among them, Bitmine was the first investment of DAT Fund, and Pantera also played the role of "Anchor" in the transaction.
On June 2, Joseph Lubin, a core figure in the Ethereum community, led the 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 a fundamental report on Ethereum through Etherealize, introducing its investment value to institutions.
On June 30, the second Ethereum reserve company, Bitmine, was born, with "Wall Street cryptocurrency expert" Thomas Lee stepping up to promote it, frequently appearing in mainstream media to interpret investment opportunities in Ethereum. During the same period, Sharplink's stock price began to climb, and the "Ethereum arms race" quickly became the hottest topic in the industry.
"To truly open the channel for financial leverage, the market capitalization of DAT companies must reach at least $1 billion to $2 billion," Cosmo told Beating Insight. 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.
However, before this, DAT companies needed to first tell their story to ordinary investors, not just crypto-native investors, but a broader retail investor audience in the stock market. "They need to understand this story and be willing to participate. The market must first 'believe it will happen' for the entire model to take shape."
Building sustained trust with the market is another key factor for the success of DAT companies. Traditional financial markets require guarantees of "transparency + discipline." The team needs to be sufficiently "Crypto Native" while also possessing the sensitivity of traditional finance to manage and disclose information for publicly listed companies, clearly understanding the SEC's 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 conducted stably? Is there the ability to build new business models? These are the hallmarks of a truly excellent '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 and then to altcoins, the narrative presented to investors in the crypto space is progressively layered: compared to Bitcoin, which entirely relies on financial engineering for growth, mainstream tokens can generate returns 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 their growth through DAT.
Differing from the financing paths of Bitcoin and mainstream coins, many altcoin DATs derive their initial reserves directly from protocol foundations themselves or their token investors.
The initial reserves of Sonnet BioTherapeutics (SONN), a strategic reserve company under Hyperliquid, were directly injected into the company by top crypto VC Paradigm, which purchased over 10 million HYPE last year. According to Beating Insight, the establishment of Ethena's strategic reserve company StablecoinX was also led by the Ethena Foundation, allowing PIPE round investors to directly use their ENA tokens or USDC for financing.
Due to poor liquidity, altcoin DATs often see huge price surges shortly after financing news is announced, providing insiders with opportunities for insider trading. In the case of SONN, the official announcement was released on July 14, but the stock price had begun to surge from July 1, quadrupling by the night before the announcement.
Recently, the BNB reserve company CEA, backed by YZi Labs, encountered similar issues. According to Beating Insight, to prevent participants from knowing the company name in advance, the team purchased several US shell companies ahead of time and randomly selected one at the last moment. Even so, there were still instances of insiders jumping the gun a few hours before the official announcement on July 28.
On the other hand, many investors are also concerned about the potential risk of altcoin DATs being a "left hand to right hand" scenario. Due to poor liquidity in the crypto market, large-cap, high-price tokens are difficult to exit without discounting. 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 "seek 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. However, such short-term operations are difficult to establish stable information disclosure and compliance mechanisms; if real capital premiums cannot be obtained, it is like passing the buck."
Regulation is also one of the risks faced by DAT companies. Once the SEC classifies altcoins and other on-chain assets as securities, the structure of DAT will require significant adjustments. Nevertheless, Primitive and Pantera still believe this is a better battlefield, "because the liquidity in the US stock market is indeed better, and investors in publicly traded companies have more protections. Therefore, for us, investing in DAT now is likely to have better win rates and odds than 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, and this is the consensus among investors. If one wants to replicate the next MicroStrategy, Nasdaq remains the best place. However, this does not mean that there are no opportunities in other capital markets; in the world outside the US stock market, everyone's goal is to become the next Metaplanet.
Over the past year, Metaplanet's stock premium has risen dramatically, bringing investors returns of more than tenfold. This "Asian miracle" success has made more people see opportunities for regional arbitrage.
The Asian market is a pioneer in Bitcoin reserves. In mid-2023, Waterdrop Capital collaborated with China Pacific Insurance Investment Management (Hong Kong) Limited to establish the Pacific Waterdrop Fund, subsequently investing in the Hong Kong-listed company Boya Interactive, which had just started its Bitcoin purchasing plan. In 2024, as MicroStrategy's stock surged, Waterdrop further confirmed this industry trend. Currently, Waterdrop has invested in five Hong Kong-listed companies and plans to invest in at least ten by the end of the year.
"It is clear that the current US market for Bitcoin and mainstream coin reserve companies is already very crowded. The next incremental growth is more likely to come from capital markets outside the US," said Nachi, a crypto trader who is now also involved in the investment wave of reserve companies. This year, he participated in the investment in Bitcoin reserve company Nakamoto Holdings and quickly achieved a 10-fold return.
At the beginning of the year, Nachi invested in Mythos Venture as a personal LP, which focuses on "Asian Bitcoin reserves." Their most recent investment was in the Thai-listed company DV8, which recently announced the completion of 241 million Thai baht in financing, becoming the first Bitcoin reserve company in Southeast Asia.
In addition, he has also personally participated in investments in several other regions' Bitcoin reserve projects, with most amounts in the seven-figure dollar range. For example, in April this year, the first Bitcoin reserve company in Latin America, Oranje, completed its acquisition with support from Brazil's largest commercial bank Itaú BBA, raising nearly $400 million in its first round of financing.
"We believe that markets like Japan, South Korea, India, and Australia still have room for Bitcoin reserve companies," Nachi said after joining Mythos, as his role gradually shifted from LP to "quasi GP," looking for investment opportunities with other members. His task is to find listed companies interested in acquisition, and the "shell owners" in the Asian region have become Nachi's recent frequent meeting partners.
"Striving to be the first" is the key to winning in capital markets outside the US stock market. This not only allows the team to accumulate first-mover advantages but also helps the company capture more market attention. However, this also means that the narrative of Bitcoin reserve companies' regional arbitrage is a race against time.
In the acquisition phase, there is a huge difference between shell companies; some can be purchased for $5 million, while in the case of Thailand's DV8, several participants spent about $20 million.
From buying a shell to trading publicly, the entire process generally takes 1 to 3 months, with regulatory approval efficiency being the main variable. However, discovering opportunities and getting things done can take at least 6 months or even longer.
The acquisition of DV8 took nearly a year, and it was only officially completed in July this year. The leading capital behind this acquisition was UTXO Management and Sora Venture, who are also the main architects behind Metaplanet.
Recently, Sora also orchestrated the acquisition of the South Korean software services company SGA. "The Asian capital market, especially Southeast Asia, is relatively closed, but the volume here is actually very large; many foreign investors are just not aware of the activity levels in these markets," Sora Ventures partner Luke told Beating Insight.
"Now everyone is racing against time, but in the Asian market, I believe few can compete with Sora." In Luke's view, local regulations pose a significant barrier for many foreign capital sources, as most VCs lack complete experience in participating in acquisitions and communicating with regulators and are not very familiar with the Asian market.
Sora Ventures' strategy is to introduce a large number of local partners to help connect with securities exchanges and regulatory bodies to accelerate project implementation. In the case of South Korea's SGA, the team took less than a month from the initial discussions to the final agreement, setting a record for the fastest acquisition in the history of the Korean securities market.
The financing rhythm of the company and market strategies are another hurdle. "mNav is a very late-stage valuation model; it only becomes valid after Bitcoin accumulates to a certain amount. Early companies have strategies and premium logic that are completely different from microstrategy." Thanks to the equity structure design of super voting rights, US stock DAT companies can ensure team control while continuously diluting equity.
However, Asian public companies generally do not have such mechanisms, thus limiting the team's dilution space. This means the team needs to accurately grasp the financing rhythm while using cash flow from their main business to repurchase stocks for reverse dilution. It is understood that Thailand's DV8 has obtained local relevant licenses and will soon start operating a cryptocurrency trading platform.
Now, Sora is accelerating to finalize an acquisition transaction in the Taiwanese market while promoting the second Bitcoin reserve company in Japan. In May of this year, the team took a 90% stake in the Hong Kong luxury distribution company Top Win, which will soon be renamed as Asia Strategy. "Our goal is to create 9 to 10 'Metaplanets' in Asia, and then integrate them into a US-listed parent company, allowing US market investors to indirectly gain exposure to the premium of Asian companies through us."
Top Win has participated in the acquisitions of Metaplanet, Hengyue Holdings, DV8, and SGA, and the company is about to complete its initial round of financing. Sora Ventures continues to adopt a "multiple players + small funds" model, with a total fundraising amount of less than $10 million and a six-month lock-up period.
Luke hopes that Top Win will present a capital layout of 30% holding of Asian companies and 60% Bitcoin reserves 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 premium in the Asian market is sustainable and whether US investors can buy into the Asian narrative remains to be tested by the market and time.
"It must be acknowledged that the Asian market has a high floor and a low ceiling; to truly achieve a certain scale, one can only do so in the US stock market, where it attracts investors and players from around the world." Although investors are trying to chase the Alpha of Bitcoin reserve narratives in various countries, there is a consensus among all investors that the underlying Beta that sustains everything still comes from favorable US regulatory drives.
"If the legislation regarding Bitcoin as a national reserve truly materializes, the US government's purchasing behavior will prompt other regional governments and sovereign funds to align their allocations, and Bitcoin could continue to rise," said Nachi.
People saved by "coin stocks."
Compared to the dismal cryptocurrency market, the current DAT track appears particularly lively. This new wave not only catches the eye but also seems to provide trapped capital in the crypto circle with an "escape" outlet. "Now, all crypto projects ranked in the top hundred by market capitalization are considering doing DAT," an investor told Beating Insight.
From late 2024 to early 2025, most crypto VC funds will be due for renewal, marking a key point for starting a new round of fundraising; however, poor DPI data has caused many LPs to hesitate. Since the beginning of the year, many crypto funds have gradually shut down.
Since 2022, the valuation in the primary market of the crypto field has been continuously inflating, with many projects able to raise tens of millions of dollars at the seed round stage, but very few have actual innovation and practical application scenarios. 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 willing to pay for "VC coins," and at the same time, projects need to pay high costs for "listing." "Now, listing on top trading platforms typically requires giving up at least 5% of the token allocation, which, at a $100 million market value, translates to a cost of $5 million. Acquiring a shell company in the US stock market is roughly the same price."
But the openness of the US regulatory environment has given everyone new hope. Cryptocurrency reserve companies have not only found the best exit channels for tokens but also provided a new narrative for attracting institutional funds to the crypto realm.
In addition to crypto VCs, mid-tier investment banks have also benefited from this trend. According to Bloomberg, DAT trading occupies 80% of the work time for many mid-tier investment bank brokers, and it is expected that business in this field will grow by 300% by 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 emerged in the market.
According to Pantera's vision, the DAT field will undergo significant consolidation within three to five years. When the downward trend arrives, small DAT companies that cannot form economies of scale will fall into negative premium dilemmas and be acquired by larger competitors at very low prices. "DAT is a 'new financial capital model experimental field', not the center of technological innovation. Ultimately, only two or three companies will survive."
However, it seems that the music is just beginning. Cosmo believes it will take at least another six months for the track to heat up, "Ultimately, who will win is entirely unknown. What we can do is support those teams we believe could become one of the 'two or three' in the future."
