More and more public companies are starting to "reserve cryptocurrency" now.
They are no longer just buying BTC or ETH, but are following in MicroStrategy's footsteps, building a replicable financial model: through PIPE, SPAC, ATM, Convertible Bonds, and other traditional financial instruments, they engage in large-scale financing, asset accumulation, and promotion, combined with the new narrative of the "on-chain treasury," incorporating cryptocurrencies such as Bitcoin, Ethereum, SOL, etc., into the company's core balance sheet.
This is not just a change in asset allocation strategy but a new form of "financial engineering": a market experiment jointly driven by capital, narrative, and regulatory gaps. Institutions such as UTXO Management, Sora Ventures, Consensys, Galaxy, Pantera have successively entered the scene, facilitating several edge-listed companies' transformation into "cryptocurrency reserve-type standout stocks" on the US or Hong Kong stock market.
However, this seemingly innovative capital feast is also arousing the vigilance of traditional finance figures. On July 18, renowned Wall Street short seller Jim Chanos warned that the current "Bitcoin treasury fever" is replaying the 2021 SPAC bubble—companies rely on issuing convertible bonds and preferred shares to buy coins but lack actual business support. "There are announcements of several billion every day, identical to the madness of back then," he said.
This article outlines the four key tools and representative cases behind this trend, attempting to answer a question: when traditional financial instruments encounter crypto assets, how can a company evolve from "buying coins" to "calling the shots"? And how can retail investors identify the risk signals in this capital game?
PIPE (Private Investment in Public Equity) refers to a listed company issuing shares or convertible bonds to specific institutional investors at a discounted price to achieve rapid financing. Compared to traditional public offerings, PIPE does not require a cumbersome review process and can inject funds quickly, making it a "strategic blood transfusion" tool in tight financing windows or times of market uncertainty.
In the trend of the crypto treasury, PIPE has been given another function: creating a signal for "institutional entry," driving rapid price increases and providing "market validation" for the project narrative. Many companies originally unrelated to crypto introduce funds through PIPE, purchase large amounts of BTC, ETH, or SOL, and quickly transform into a new identity as a "strategic reserve-type enterprise." For example, after announcing a $425 million PIPE financing to establish an ETH treasury, SharpLink Gaming (SBET) saw its stock price skyrocket more than tenfold in a short period.
However, the impact of a PIPE goes far beyond surface-level benefits. In terms of its structure, PIPE investors usually have a more favorable entry price, unlocking schedule, and liquidity pathway. Once the company files an S-3 registration statement, the related shares become eligible for public trading, allowing institutional investors to choose to cash out. Although the S-3 filing is essentially a technicality and does not directly imply that a sell-off has occurred, in a highly emotional market, this action is often misinterpreted as "institutions starting to unload," triggering market panic.
SharpLink's experience serves as a typical case: on June 12, 2025, the company filed an S-3 registration statement, allowing PIPE shares to be publicly resold. Despite Chairman and Ethereum co-founder Joseph Lubin publicly clarifying that "this is a standard PIPE follow-on process in tradfi," and stating that neither he nor Consensys had sold any shares, the market sentiment was irreversibly damaged. The stock price dropped by 54.4% over the following five trading days, becoming a textbook example of the structural risks of the PIPE model. Although there was a subsequent price rebound, the drastic price fluctuations of "soaring and then plunging" reflected a structural gap in the PIPE process.
Furthermore, BitMine Immersion Technologies (BMNR) also played out the "soaring and plunging" script after announcing their PIPE structure. After announcing a $2 billion PIPE financing for Ethereum treasury development, the stock price surged and then plummeted, experiencing a nearly 39% single-day drop, becoming one of the four high-risk "crypto treasury stocks" mentioned in the Unchained report.
The fundamental risk of a PIPE lies in information asymmetry and liquidity mismatch: institutional investors enter at a discount, enjoying a reserved exit mechanism, while retail investors often only participate in positive narratives such as "successful funding" or "coin-based treasury," passively bearing the risk when the unlocking pressure arrives. In traditional financial markets, this "pump and dump" structure has long been a subject of controversy. In the less regulated and more speculative cryptocurrency sector, this structural imbalance is further amplified, becoming another aspect of risk in a capital narrative-driven market.
A Special Purpose Acquisition Company (SPAC) was originally a tool used in the traditional market for reverse mergers: a group of sponsors first established a blank-check company, raised funds through an IPO, and then within a specified timeframe, sought and acquired a private company to bypass the regular IPO process, achieving "rapid listing."
Meanwhile, in the crypto market, SPACs have been given a new purpose: to provide a financial container for "strategic reserve" companies to securitize their Bitcoin, Ethereum, and other digital assets, integrate them into the exchange system, and thus achieve a two-way convenience of financing and liquidity.
These companies often lack a clear business path, product model, or source of revenue. Their core strategy is to first purchase crypto assets through PIPE financing, build a "coin-based" balance sheet, and then use a SPAC merger to enter the public market, packaging to investors an investment narrative of "holding coins equals growth."
Typical representatives include Twenty One Capital, ProCap, and ReserveOne, with most of these projects revolving around a simple model: raising funds to purchase Bitcoin and putting the Bitcoin into a stock ticker. For example, Twenty One Capital holds over 30,000 Bitcoins, merged with a SPAC backed by Cantor Fitzgerald, raised $5.85 billion through PIPE and convertible bond financing, with some funds used for on-chain yield strategies and Bitcoin financial product development. ProCap, supported by Pompliano, focuses on developing lending and staking businesses around Bitcoin treasury. ReserveOne is more diverse, holding assets such as BTC, ETH, SOL, and participating in institutional-grade staking and OTC lending.
In addition, these companies are usually not content with just "HODLing." They often further issue convertible bonds, issue new shares to raise more funds to purchase more Bitcoin, forming a "structural leverage model" similar to MicroStrategy. As long as the coin price rises, the company's valuation can expand disproportionately.
The biggest advantage of the SPAC model is time and control. Compared to the 12-18 months required for a traditional IPO, a SPAC merger can theoretically be completed in 4-6 months, with a more flexible narrative space. Founders can tell a future story without disclosing existing revenue, lead valuation negotiations, and retain more equity. Although in practice, such crypto projects often face a longer regulatory review period (Circle ultimately abandoned the SPAC route for an IPO), the SPAC route is still popular, especially for "coin-based companies" that have not yet established revenue-generating capabilities, as it provides a shortcut to bypass product, user, and financial foundations.
More importantly, the "publicly traded company" status brought by SPACs has a natural legitimacy in investor awareness. The stock ticker can be included in ETFs, traded by hedge funds, and listed on Robinhood. Even though the underlying asset is a cryptocurrency, the outer packaging aligns with the language system of traditional finance.
Simultaneously, such structures often carry strong "signaling value" — once a large-scale PIPE financing is announced or a partnership is reached with a well-known financial institution, retail investor sentiment can quickly be activated. Twenty One Capital has attracted market attention precisely because it is backed by endorsements from entities such as Tether, Cantor, and SoftBank, even though the company's actual operations have not yet begun.
However, the SPAC brings not only convenience and glamour but also significant structural risks.
Business Stagnation and Narrative Overextension: Many companies that merge with SPACs themselves lack stable revenue, and their valuation heavily relies on whether the "Bitcoin strategy" can continue to attract attention. Once market sentiment reverses or regulations tighten, the stock price will quickly plummet.
Structural Inequality in Institutions' Favor: Sponsors and PIPE investors typically enjoy enhanced voting rights, early release of shares from lock-up, pricing advantages, and other privileges. Retail investors are in a dual disadvantage of information and rights, leading to significant equity dilution.
Compliance Operations and Disclosure Challenges: After the merger is completed, the company must bear the obligations of a public company, such as audits, compliance, risk disclosure, especially in the context of incomplete digital asset accounting rules, making it prone to financial report chaos and audit risks.
Valuation Bubble and Redemption Pressure Mechanism: SPACs often experience an overvaluation in the early stages of listing due to narrative expectations. If retail investors massively redeem their shares during a sentiment reversal, the company will face cash flow constraints, failed anticipated financing, or even triggering secondary bankruptcy risks.
More fundamentally, the issue lies in the fact that SPAC is a financial structure, not a value creator. It is essentially a "narrative container" that packages Bitcoin's future vision, institutional endorsements, and capital leverage plans into a tradable stock symbol. When Bitcoin is rising, it appears more appealing than an ETF; but when the market reverses, its complex structure and weak governance will be even more thoroughly exposed.
Related Reading: "2024 Crypto IPO Boom: SPAC Replaces Traditional Shell Mergers, Bitcoin Companies Collective Sprint"
ATM (At-the-Market Offering), originally a flexible financing tool, allows publicly traded companies to sell shares to the open market in stages at market prices, real-time fundraising. In traditional capital markets, it is often used to hedge operational risks or supplement cash flow. In the crypto market, ATM has been given another function: to become a strategic reserve for companies to increase their Bitcoin exposure at any time, maintain liquidity, a "self-service financing channel."
The typical approach is as follows: a company first builds a Bitcoin treasury narrative, then initiates an ATM program to continuously sell shares to the market without a specific price and time window, in exchange for cash to buy more Bitcoin. Unlike a PIPE, it does not require specific investors to participate, nor does it require complex disclosure processes like an IPO, making it more suitable for narrative-driven asset allocation companies with flexible pacing.
For example, the Canadian publicly listed company LQWD Technologies announced in July 2025 the initiation of an ATM program, allowing it to periodically sell up to 10 million Canadian dollars of common stock to the market. The official statement indicated that the ATM program "enhances the company's Bitcoin reserve capability and supports its global Lightning Network infrastructure expansion," clearly conveying its growth path centered around Bitcoin as a core asset. Another example is the Bitcoin mining company BitFuFu, which in June signed ATM agreements with multiple underwriters, planning to raise up to $150 million through this mechanism and has formally filed with the SEC. Their official documents state that this will help the company raise funds based on market dynamics without the need to pre-set a fundraising window or trigger conditions.
Related reads: "Publicly Listed Company LQWD Initiates ATM Program to Rapidly Increase Bitcoin Holdings" "BitFuFu Plans to Launch $150 Million ATM Financing"
However, the flexibility of ATM also means higher uncertainty. Although companies are required to submit a registration statement to the SEC (usually on Form S-3), detailing the issuance scale and plan, and are subject to dual regulation by the SEC and FINRA, the issuance can occur at any point in time and does not require prior disclosure of specific prices and timing. This "no-warning" issuance mechanism is particularly sensitive when the stock price is declining, easily triggering a "downward spiral" of dilution, weakening market confidence, and harming shareholder equity. Due to high information asymmetry, retail investors are more likely to passively bear risks during this process.
Furthermore, ATM is not suitable for all companies. If a company does not have "Well-Known Seasoned Issuer" (WKSI) status, it must also adhere to the "one-third rule," which states that fundraising through an ATM within 12 months must not exceed one-third of its public float market value. All transactions during the issuance process must be completed through regulated broker-dealers, and the company must also disclose fundraising progress and fund utilization in financial reports or through 8-K filings.
Overall, ATM is a means of centralized fundraising power: companies do not need to rely on banks, do not need to raise funds externally, and only need to "press a button" to raise cash to stack Bitcoin or Ethereum. For the founding team, this is an extremely attractive path; however, for investors, it may mean passive dilution without warning. Therefore, behind the "flexibility" lies a long-term test of governance ability, transparency, and market trust.
A Convertible Bond is a financing instrument with both debt and equity attributes, allowing investors to enjoy bond interest while retaining the right to convert the bond into company stock, offering a dual path of "fixed-income security" and "equity potential" benefits. In the crypto industry, this instrument is widely used for strategic financing, especially favored by companies that wish to fund "stacking Bitcoin" without immediately diluting their shares.
Its appeal lies in the fact that: for companies, convertible bonds can complete large-scale financing at a lower interest rate (even zero); for institutional investors, it provides an arbitrage opportunity of "downside protection and upside stock price appreciation." Many mining companies, stablecoin platforms, and on-chain infrastructure projects have introduced strategic funds through convertible bonds. However, this also lays the groundwork for dilution risk: once the stock price reaches the conversion conditions, the bonds will quickly convert into shares, releasing a large amount of selling pressure and causing a sudden market impact.
MicroStrategy is a typical case of using convertible bonds for "strategic reserve-like stacking." Since 2020, the company has issued two convertible bonds totaling $1.7 billion, all used to purchase Bitcoin. Its first bond issued in December 2020 was a 5-year term with an interest rate of only 0.75% and a conversion price of $398 (a 37% premium); the second bond in February 2021 was at a 0% interest rate, 6-year term, with a conversion price of $1432 (a 50% premium), still receiving $1.05 billion in oversubscription. MicroStrategy leveraged its holdings of over 90,000 Bitcoins at an extremely low cost of funds, almost zero leverage cost, and achieved a super-stacking of Bitcoin, earning its CEO Michael Saylor the nickname "Cryptocurrency's Biggest Gambler."
However, this model is not without cost. MicroStrategy's financial leverage far exceeds traditional corporate standards, and if the price of Bitcoin sharply declines, the company's net assets could become negative. As shown in the IDEG report, if BTC falls below $17,500, MicroStrategy would face a situation where its liabilities exceed its assets. In addition, since its convertible bonds are in private placement form, some mandatory redemption and conversion terms are not disclosed, further increasing market uncertainty about the pace of future dilution.
Related Reading:《Uncovering the Top "Gambler" in the Crypto World: Is MicroStrategy's Convertible Bond Strategy Reliable?》
Overall, a convertible bond is a double-edged sword: it provides enterprises with extremely high flexibility between "financing without dilution" and "strategic accumulation," but it may also trigger concentrated selling pressure at a certain moment. Especially under asymmetric information conditions, ordinary investors often find it difficult to perceive the specific trigger point of conversion terms, becoming the ultimate dilution bearers under pressure.
On July 18, Wall Street's famous short seller Jim Chanos likened this "crypto treasury fever" to the 2021 SPAC frenzy on a podcast — back then, $90 billion was raised within three months, but ultimately collapsed collectively, with blood flowing like a river. He pointed out that the difference in this round is that companies are purchasing Bitcoin through issuing convertible bonds and preferred stock, yet without actual business support. "We can see announcements of billions almost every day," he said, "which is eerily similar to the SPAC frenzy back then."
Related Reading:《Wall Street Big Short Warns: Corporate Bitcoin Treasury Craze Echoing SPAC-style Bubble Risk》
Meanwhile, a report from "Unchained" further pointed out that such "crypto treasury companies" face serious structural risks. The report listed representative projects such as SATO, Metaplanet, and Core Scientific, indicating that their true asset net value (mNAV) is far below market valuation, compounded by issues such as unclear disclosure, inadequate treasury quality, and complex structure. Once market sentiment reverses, they are highly likely to transition from "crypto reserves" to "financial nuclear bombs."
Related Reading:《These 4 Crypto Treasury Companies Are Ready for a Price Crash》
For ordinary investors, "company buying coins" is much more complex than it appears on the surface. What you see are announcements, price surges, narratives, and numbers, but what truly drives price fluctuations is often not the coin price itself but the design of the capital structure.
The PIPE determines who can enter at a discount, who is responsible for picking up the slack; the SPAC determines whether a company can bypass financial scrutiny and tell a story directly; the ATM determines whether the company is still "selling on the way down" when the stock price drops; and the convertible bond determines when someone suddenly converts bonds into stocks and engages in concentrated selling.
In these structures, retail investors are often arranged at the "end of the line": without preferential information and no liquidity protection. What may seem like an investment in "believing in crypto" actually entails multiple risks related to leverage, liquidity, and governance.
Therefore, when financial engineering enters the narrative battlefield, investing in crypto companies is no longer just a matter of being bullish on BTC or ETH. The real risk lies not in whether the company has bought coins, but in whether you can understand how it is "manipulating" the situation.
How market capitalization inflates with coin price, and how it, in turn, unleashes selling pressure through the structure—this design process determines whether you are participating in growth or taking on the detonator for the next round of a crash.
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