Crypto VCs have brought a $2 trillion story to Wall Street

Cryptocurrency VC is using reverse mergers to transform US companies on the brink of delisting into crypto asset reserve companies (DAT), linking the fundamentals of listed companies to cryptocurrencies. This move not only skyrocketed the company's stock price but also successfully conveyed the $2 trillion story of the crypto world to Wall Street. (Background: Bitcoin Reserve Companies: Why spend $2 to buy $1 worth of BTC?) (Supplementary Background: Sun Yuchen appeared at the TRON. Inc. name change bell-ringing ceremony, TRX reserve strategy opens a new era of crypto assets) Suddenly, it seems that the most eye-catching aspect of the US stock market is no longer AI, but a bunch of near-delisting junk companies. In recent months, the US capital market has been experiencing unprecedentedly large-scale reverse mergers at an increasing dollar amount. Public companies have completely abandoned their original main business, turning cryptocurrencies into their fundamentals, resulting in stock prices soaring several times or even dozens of times in a short period. Now, the US stock market has become a playground for the crypto world to conduct financial experiments. This time, crypto VC has really told the story to Wall Street. 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 actually just a month or two ago,' said Primitive partner Yetta. In June this year, Sharplink Gaming announced the completion of $425 million in financing, becoming the first Ethereum reserve company in the US stock market. After the news was announced, the company's stock price soared, once increasing by more than 10 times. Primitive, as the only fund participating in this investment case in the Chinese circle, has attracted attention within the community. 'Because we found that the liquidity in the crypto market is not good, but the purchasing power on the institutional side is very strong, the Bitcoin ETF volume has been very good, and the OI of Bitcoin options on CME even exceeds that of Binance.' In April last year, Primitive held an internal meeting for a major review and thereafter set a new investment direction of 'the integration of CeFi (centralized finance) and DeFi (decentralized finance)'. Now, they have become one of the busiest VCs in the crypto world. Nowadays, 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 serve as intermediaries, responsible for finding and coordinating all investors for the project parties, and assisting teams in conducting roadshows for the investors. In the past month, Primitive has talked to no less than 20 cryptocurrency reserve projects. But currently, the only projects they are publicly participating in investments are Sharplink and another company, MEI Pharma, which does Litecoin reserves. This cautious investment action 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 degree of market bubble is significantly higher than it was a few months ago,' Yetta told Dongcha Beating, saying the team now produces daily market reports 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 are also risks of severe deleveraging and bubble bursting when the market declines.' Unlike Primitive, Pantera is rolling up its sleeves and preparing for a major endeavor. This established crypto VC with a 12-year history even created a new term for this field—DAT (Digital Asset Treasury). At the beginning of July, Pantera established a new fund and named it the DAT Fund. In the fundraising memorandum, Pantera partner Cosmo Jiang wrote: 'As an investor, it is very rare to find yourself at the starting point of a new investment category; recognizing this and responding quickly to seize early investment opportunities is crucial.' The story that Pantera tells investors is very simple: if a company holds an increasing amount of Bitcoin per share each year, owning shares in that company will give you more and more Bitcoin. The underlying logic of Bitcoin reserve companies led by MicroStrategy and other crypto reserve companies is to leverage financial instruments such as directed share issuances, convertible bonds, and preferred stocks to raise funds from the market when there is a premium on the value of crypto assets compared to its market capitalization, thus enabling them to accumulate more crypto 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 capabilities. 'The stock market is obviously volatile; sometimes the market overestimates certain assets, and activating financial instruments to raise funds is essentially selling this volatility. From this perspective, the premium can actually be maintained in the long term,' Cosmo told Dongcha Beating. In April this year, Pantera invested in Defi Development Corps (DFDV), which reserves Solana's public chain token SOL; this is the first company in the US stock market to use cryptocurrencies other than Bitcoin as reserve assets, with its stock price having increased more than 20 times in the past six months. However, for Pantera, this was definitely a counter-consensus investment, as no one was willing to invest in the project at the beginning, and almost all of the company's $24 million financing came from Pantera. Most of the DFDV team members come from senior ranks at Kraken, and the CFO has operated Solana validation nodes; the team's deep understanding of Solana and their expertise in traditional finance became key factors that impressed Pantera. 'Even so, we still set some downside protection measures in the trading structure, but DFDV's astonishing success was something we completely did not anticipate.' 'I believe the real catalyst was Coinbase being included in the S&P 500 index, which forced fund managers around the world to consider crypto.' Since Trump's election, the crypto industry has been advancing rapidly in traditional capital markets, with Circle's IPO attracting global attention to stablecoins, and Robinhood's entry into RWA further propelling the tokenization of securities. Now, DAT is becoming a relay concept. Less than a month after investing in DFDV, Cantor Equity Partners also came knocking. DFDV's success accelerated SoftBank and Tether's plans for a Bitcoin reserve company, ultimately raising about $300 million in external funding through CEP's private placement, with Pantera again becoming its largest external investor. Investments in DFDV and CEP came from Pantera's flagship venture fund and liquid token fund, and the team initially thought these would be the only two investments the fund would make in this field. But the market's development is very...