Author: Cynic, CGV Research

Under the strategic shift of the Trump administration fully embracing crypto assets, the scale of crypto reserves held by listed companies is about to surpass the $100 billion mark. This article systematically outlines the global landscape of corporate crypto reserves, deeply analyzes the capital operation model centered around MicroStrategy, and explores the differentiated paths and potential risks of altcoin reserve companies—this experiment of "digital assetization" led by traditional enterprises is reconstructing the future paradigm of corporate financial management.

Global Crypto Reserve Enterprises Overview

From the distribution of listed companies, U.S. listed companies account for 65.2%, Canada 16.9%, Hong Kong 7.9%, and Japan has a small number of companies holding reserves (3.4%), while other countries account for 6.7%.

In terms of the types of crypto assets held by listed companies, BTC accounts for 78%, with ETH, SOL, XRP, and others close to 5%-6%, while companies holding other crypto assets account for the remaining 5%.

In terms of the value of crypto assets held by listed companies, BTC is in an absolute leading position, accounting for 99% of the value, while the remaining assets account for just 1%.

According to the statistical analysis of the time when companies first announced their crypto strategic reserves, the results are shown in the figure below.

Note: Only includes accurately disclosed partial data.

From the figure, we can observe significant peaks and troughs, which also correspond to the bull and bear cycles of the cryptocurrency market itself.

Two notable peak periods:

• 2021: 25 companies announced strategic reserves, mainly driven by the rise in Bitcoin prices and the demonstration effect of MicroStrategy.
• 2025: 28 companies, reaching a historical peak, indicating a further increase in the acceptance of cryptocurrencies as corporate reserve assets.

Characteristics of the trough period:

• 2022-2023: Only 3 companies entered the market, reflecting the impact of the bear market in the crypto market and regulatory uncertainties.

Recently, more companies have announced their crypto reserves, and it is expected that the number of listed companies with crypto reserves will exceed 200 this year, with the adoption of cryptocurrencies in traditional industries continuing to rise.

Strategic Reserves, Capital Operations, and Stock Price Performance

From the current capital operation models of various digital asset reserve companies, they can be summarized into the following categories:

1. Leverage Hoarding Model: Companies with weak main businesses raise funds through debt and financing to purchase crypto assets, aiming to increase net assets when crypto assets appreciate, which in turn drives up stock prices and further financing, forming a positive feedback loop. Essentially, this model turns the company's stock into a leveraged spot for crypto assets. If operated properly, it can leverage small costs to synchronize the rise of stock prices and net assets. Typical cases: MicroStrategy ($MSTR BTC reserves), SharpLink Gaming ($SBET ETH reserves), DeFi Development Corp ($DFDV SOL reserves), Nano Labs ($NA BNB reserves), Eyenovia ($EYEN HYPE reserves).
2. Cash Management Model: Companies with strong main businesses (unrelated to crypto) purchase high-quality crypto assets to gain investment returns when cash flow is abundant. This usually does not have a significant impact on stock prices and may even lead to a decline due to investors' concerns about neglecting the main business. Typical cases: Tesla ($TSLA BTC reserves), Boyaa Interactive (HK0403 BTC reserves), Meitu (HK1357 BTC + ETH reserves).
3. Business Reserve Model: Companies whose main businesses are related to crypto engage in direct or indirect reserve activities. For example, exchange businesses require reserves, and mining companies retain mined Bitcoin as reserves to mitigate potential business risks. Typical cases: Coinbase ($COIN various crypto asset reserves), Marathon Digital ($MARA BTC reserves).

|-----------------------------|--------------------|-------------------------------------------|---------------------------------|--------| | Company (Market) | Reserve Currency | Holding Size | Stock Price Impact | Capital Operation Model | | MicroStrategy (US) | BTC | 592,345 BTC (approximately $63.4 billion) | Stock price rose over 300% after announcing strategy, latest purchase caused stock price to fluctuate 2-3% | Leverage Hoarding | | Marathon Digital (US) | BTC | 49,179 BTC (approximately $5.3 billion) | Significant stock price fluctuations after announcement | Business Operation | | Metaplanet (JP) | BTC | 12,345 BTC (approximately $1.3 billion) | Stock price fell 0.94% after latest purchase, overall strategy received positive feedback | Leverage Hoarding | | Tesla (US) | BTC | 11,509 BTC (approximately $1.2 billion) | Stock price surged after purchase in 2021, remained stable | Cash Management | | Coinbase Global (US) | BTC, ETH, etc. | 9,267 BTC (approximately $990 million), 115,700 ETH (approximately $280 million) | Minimal stock price impact as held by exchange | Business Operation | | SharpLink Gaming (US) | ETH | 188,478 ETH (approximately $47 million) | Stock price surged over tenfold, then plummeted 70% in one day | Leverage Hoarding | | DeFi Development Corp (US) | SOL | 609,190 SOL (approximately $10.7 million) | Stock price rose 6000% since announcement, then retraced 70% | Leverage Hoarding | | Trident Digital (SG) | XRP | Announced plan to raise $500 million to purchase XRP on June 12, 2025 | Significant fluctuations on the day, ultimately closed down 3% | Leverage Hoarding | | Nano Labs (US) | BNB | Target reserve of $1 billion in BNB | Stock price doubled after announcement, reaching a two-year high | Leverage Hoarding | | Eyenovia→Hyperion DeFi (US)| HYPE | Target of 1 million HYPE (approximately $50 million) | Stock price rose 134% on the day, continued to hit new highs, over 380% increase since announcement | Leverage Hoarding | | Meitu (HK) | Bitcoin + Ethereum | Fully liquidated (originally held 940 BTC + 31,000 ETH) | Stock price surged 4% after selling all crypto assets for a profit of $80 million at the end of 2024 | Cash Management |

Among many companies, MicroStrategy has flexibly utilized leverage, transforming from a software service provider with years of losses into a Bitcoin whale with a market value of hundreds of billions, making its operation model worthy of in-depth study.

MicroStrategy: A Textbook Case of Crypto Reserve Leverage Operation

Five Years, Thirtyfold Increase: Bitcoin Leverage Proxy

Since MicroStrategy announced its Bitcoin strategic reserve in 2020, its stock price has shown a high correlation with Bitcoin prices, and its volatility is far higher than that of Bitcoin itself, as can be intuitively seen from the figure below. From August 2020 to now, MSTR has increased nearly thirtyfold, while Bitcoin's price has only increased tenfold during the same period.

By comparing the monthly volatility and correlation of Bitcoin and MSTR, it can be seen that most of the time, MSTR's price correlation with Bitcoin is in the range of 0.6-0.8, showing a strong correlation; at the same time, MSTR's volatility is several times higher than that of Bitcoin. In terms of results, MSTR can be regarded as a spot leverage security for Bitcoin. From another perspective, MSTR's Bitcoin leverage attribute can also be verified: In June 2025, MSTR's one-month call option implied volatility was 110%, which is 40 percentage points higher than Bitcoin's spot, indicating that the market assigns it a leverage premium.

A Sophisticated Capital Operation Machine

The core of MicroStrategy's model is to acquire funds at a lower financing cost to purchase Bitcoin, as long as the expected return on Bitcoin is higher than the actual financing cost, the model can continue to exist.

MicroStrategy has created a matrix of capital tools that transforms Bitcoin's volatility into structured financing advantages, employing various financing strategies to form a self-reinforcing capital cycle. VanEck analysts have described it as a "pioneering experiment combining digital currency economics with traditional corporate finance."

The core objectives of MicroStrategy's capital operations are twofold: controlling the debt ratio and increasing the number of BTC per share. Assuming BTC rises in the long term, achieving these two core objectives will also enhance the value of MicroStrategy's stock.

For MicroStrategy, mortgage lending has hidden costs and limitations, such as insufficient capital efficiency (requiring a 150% over-collateralization rate), uncontrollable liquidation risks, and limited financing scale.

Compared to mortgage lending, financing methods such as convertible bonds and preferred stocks with embedded options can further reduce costs and have a smaller impact on the asset-liability structure. Selling ATM common stock can also quickly and flexibly raise cash. Preferred stocks, in terms of accounting treatment, are recorded as equity rather than debt, further reducing the debt ratio compared to convertible bonds.

|--------|-----------------------------------------------------------------------------------------------------|----------------|------------------------|-------------| | Tool Type | Mechanism | Investor | Company | Risk Characteristics | | Convertible Bond | Bonds that can be converted into common stock at a predetermined conversion ratio under specific conditions, allowing participation in equity appreciation; if conversion conditions are not met, holders can receive interest and principal at maturity according to bond terms | Low-risk Bitcoin call options | Low-cost financing, optimizing capital structure after conversion | High priority repayment + conversion gains | | ATM Common Stock | A mechanism for gradually publicly selling common stock at market prices through a registered securities dealer agreement; there is no minimum fundraising requirement, and the company can decide the timing, scale, and price of issuance based on funding needs and market conditions; funds obtained from selling stock are directly included in the company's books without the need for a custodial or trust account | Maximum Bitcoin exposure | Highly flexible financing channel | Fully exposed to BTC volatility | | STRK | Annual interest of 8.00%, cumulative, with a liquidation priority of $100 per share, convertible into common stock at an initial conversion rate of 0.10 times on any trading day | Stable dividends + call options + hedging tool | Flexible dividend payments, supports cash common stock mixed payments, tax-deductible | Dividend + conversion rights protection | | STRF | Annual interest of 10.00%, similar to cumulative preferred stock, unpaid dividends will accumulate with compound interest; in the event of significant changes (such as mergers, sales), the company can be required to repurchase shares at face value; no conversion rights | Fixed income + hedging | Flexible dividend payments, tax-deductible | High-interest compensation for volatility risk | | STRK | Annual interest of 10.00%, but non-cumulative, paid in cash; in the event of significant changes, the company can be required to repurchase stock at the original selling price ($100); no conversion rights | Fixed income + hedging tool | Flexible dividend payments, tax-deductible | Pure dividend cash flow |

This complex matrix of capital tools is favored by professional investors, allowing them to arbitrage based on differences in actual volatility, implied volatility, and other components of option pricing models, which also establishes a loyal buying base for MicroStrategy's financing tools.

By combining quarterly Bitcoin holdings with liabilities and significant capital operation events, it can be observed:

Through the combination of various financing tools, MicroStrategy issues convertible bonds and preferred stocks in a bull market when Bitcoin volatility is high and stocks have a positive premium, expanding Bitcoin holdings, and in a bear market when Bitcoin volatility is low and stocks have a negative premium, it sells common stocks via ATM to prevent excessive debt ratios from triggering a chain liquidation risk.

During high premium periods, convertible bonds and preferred stocks are prioritized for the following reasons:

1. Dilution Delay Effect: Directly issuing common stock (ATM) immediately dilutes existing shareholders' equity. In contrast, convertible bonds and preferred stocks embed conversion options, delaying equity dilution to the future.
2. Tax Efficiency Structure: Preferred stock dividends can deduct 30% of taxable income, reducing the actual cost of the 8% dividend rate STRK to 5.6%, lower than the 7.2% interest rate of comparable corporate bonds. Common stock financing does not generate tax deduction benefits.
3. Avoiding Reflexivity Risk: Large-scale ATM sales are seen as a signal that management believes the stock price is overvalued, potentially triggering programmatic sell-offs.

• Debt Ratio* = Total Liabilities ÷ Total BTC Value Held
• mNAV = Market Value ÷ Total BTC Value Held

Due to its unique financing structure, when Bitcoin rises, MSTR rises at a higher rate, and a large amount of debt will be converted into equity. In fact, since MicroStrategy announced its Bitcoin purchases, its total equity has increased from 100M to 256M, a rise of 156%.

Will a large amount of equity issuance dilute shareholders' equity? From the data, since Q4 2020, MicroStrategy's equity has increased by 156%, yet the stock price has only increased thirtyfold, indicating that shareholders' equity has not been diluted but significantly enhanced. To better represent shareholders' equity, MicroStrategy proposed the metric of BTC per Share, with the goal of continuously increasing BTC per Share through capital operations. From the figure, it can be seen that, in the long run, BTC per Share has consistently been on an upward trend, having increased tenfold from the initial 0.0002 BTC per Share.

Mathematically, when MSTR's stock price has a high positive premium over Bitcoin (mNAV > 1), potential equity dilution financing to purchase Bitcoin can continuously push up BTC per Share. mNAV > 1 means that the funds raised per share can purchase more BTC than the current BTC per Share, and although the original shares are diluted, the BTC value per share still rises after dilution.

MicroStrategy's Future Projection

I believe the key factors for the success of the MicroStrategy model are threefold: regulatory arbitrage, correct bets on Bitcoin appreciation, and excellent capital operation capabilities. At the same time, risks are also hidden within.

Legal and Regulatory Changes

1. The abundance of Bitcoin investment tools squeezes MicroStrategy's buying power: When MicroStrategy first announced its Bitcoin strategic reserve, Bitcoin spot ETFs had not yet been approved, and many investment institutions could not directly obtain Bitcoin exposure within a compliant framework, thus purchasing through MicroStrategy as a proxy asset. However, after Trump took office, the government vigorously promoted cryptocurrencies, leading to a surge of compliant crypto-related investment tools, gradually narrowing the space for regulatory arbitrage.
2. SEC restrictions on excessive leverage of "non-productive assets": Although MicroStrategy has maintained its debt ratio at a controllable level through precise debt management, its current debt ratio is significantly lower than that of many companies with similar market values. However, listed companies typically use debt for business expansion, while MicroStrategy's debt is entirely for investment, which may lead the SEC to reclassify it as an investment company, raising its capital adequacy requirements by over 30%, thereby compressing leverage space.
3. Capital Gains Tax: If unrealized capital gains held by the company are taxed, MicroStrategy will face significant cash tax pressures. (The current OBBB bill stipulates that taxes are only levied upon sale.)

Bitcoin Market Dependency Risks

1. Volatility Amplifier: MicroStrategy currently holds 2.84% of the total Bitcoin supply, and when Bitcoin volatility rises, MicroStrategy's stock price volatility will also increase several times more than Bitcoin's, putting significant pressure on stock prices during downturns.
2. Irrational Premium: MicroStrategy's market value has long been at a premium of over 70% to its net Bitcoin value, with most of this premium stemming from the market's irrational expectations of Bitcoin appreciation.

Debt Leverage's Ponzi-like Structural Risks

1. Reliance on convertible bond circular financing: The cycle of "borrowing new debt → purchasing BTC → driving up stock price → issuing more debt" has dual Ponzi characteristics. When large bonds mature, if Bitcoin prices do not continue to rise to support stock prices, the inability to issue new debt will trigger a liquidity crisis (debt rollover risk); if BTC prices fall and stock prices drop below the convertible bond conversion threshold, the company will be forced to repay in cash (conversion price inversion).
2. Lack of stable cash flow: Since the company does not have a stable cash flow source and cannot sell Bitcoin, MicroStrategy's debt repayment method is primarily through issuing new stock (debt-to-equity swaps, ATM). When stock prices or Bitcoin prices fall, financing costs significantly increase, potentially leading to risks of closed financing channels or substantial dilution, making it difficult to continue increasing holdings or maintain operational cash flow.

In the long run, when entering a downturn cycle for risk assets, multiple overlapping risks may trigger a chain reaction, forming a technical risk transmission mechanism that leads to a death spiral:

Another possibility is proactive regulatory intervention, converting MicroStrategy into a Bitcoin ETF or similar financial product. If MicroStrategy's current holding of 2.88% of total BTC were to face a liquidation wave, it could directly lead to the collapse of the crypto market; converting to an ETF would be much safer. Although MicroStrategy holds a large amount of Bitcoin, it does not stand out when compared to ETFs. Additionally, on July 2, 2025, the SEC approved the conversion of the Grayscale Digital Large Cap Fund into an ETF holding a combination of BTC, ETH, XRP, SOL, ADA, etc., indicating the possibility.

Altcoin Reserve Experiment: Taking $SBET and $DFDV as Examples

Valuation Regression Analysis: From Sentiment-Driven to Fundamental Pricing

$SBET's Volatility Path and Stabilization Signals

Causes of Wild Fluctuations: In May 2025, $SBET announced a PIPE financing of $425 million to acquire 176,271 ETH (then valued at $463 million), becoming the largest listed company holder of ETH globally, with its stock price soaring 400% in a single day. Subsequently, SEC filings showed that PIPE investors could resell their shares, triggering panic selling in the market due to dilution fears, causing the stock price to plummet 70%. Ethereum co-founder Joseph Lubin (chairman of $SBET's board) clarified "no shareholder selling," but market sentiment had already been damaged.

Signs of Valuation Repair:

As of July 2025, $SBET's stock price stabilized around $10, with an mNAV of approximately 1.2 (about 2.67 after accounting for PIPE issuance).

The stabilization momentum comes from:

1. Appreciation of ETH Holdings: An additional purchase of $30.6 million for 12,207 ETH, bringing total holdings to 188,478 ETH (approximately $47 million), accounting for 80% of market value.
2. Realization of Staking Rewards: Earned 120 ETH through liquid staking derivatives (LSD);
3. Improved Liquidity: Average daily trading volume of 12.6 million shares, with short interest dropping to 8.53%.

$DFDV's Ecosystem Integration Premium

Compared to $SBET, although $DFDV's volatility is also very high, its stock price has stronger support for declines. Despite experiencing a single-day drop of 36%, $DFDV still has a 30-fold stock price gain since its transformation. This is partly due to the company's low market value before the transformation and partly due to its business diversity, especially its investments in infrastructure, providing more valuation support.

Valuation Support from SOL Reserves:

$DFDV holds 621,313 SOL (approximately $10.7 million), with three sources of income:

1. SOL Price Appreciation (accounting for 90% of holding value);
2. Staking Rewards (annualized 5%-7%);
3. Validator Commissions (charged to ecosystem projects like $BONK).

PoW vs. PoS: The Impact of Staking Returns

POS cryptocurrencies like ETH and SOL generate annualized returns from native staking, which may not directly affect valuation models, but liquid staking is expected to enhance capital operation flexibility.

1. Bitcoin, as a PoW token, has no interest mechanism but has a fixed total supply, with a continuously declining inflation rate (currently at 1.8%), giving it scarcity. PoS tokens can earn returns through staking, and when staking returns exceed token inflation rates, the staked assets gain nominal appreciation. Currently, SOL staking annualized returns are 7%-13%, with an inflation rate of 5%; ETH staking annualized returns are 3%-5%, with an inflation rate of less than 1%. Current ETH/SOL staking can generate additional returns, but attention must be paid to changes in inflation rates and staking returns.

1. The returns generated from staking are in the form of the token itself and cannot be converted into purchasing power in the secondary market to further drive up token prices.
2. Liquid staking allows for the use of staked assets in DeFi activities, such as collateralized lending, enhancing capital operation flexibility. (For example, DFDV has issued its own liquid asset DFDVSOL.)

$MSTR's Success Factors in the Context of Altcoin Reserve Companies

Regulatory Arbitrage: Shrinking Space

Recently, the approval speed for ETF applications has noticeably accelerated, with multiple institutions applying for ETFs for different cryptocurrencies, making approval just a matter of time. Before more complex financial instruments targeting specific cryptocurrencies emerge, the stocks and bonds of altcoin reserve companies can still meet some investors' needs, but the space for regulatory arbitrage is gradually narrowing.

|--------|------------|------------|-------------| | Token | 30-Day Volatility | Institutional Holding Ratio | ETF Catalysis Progress | | BTC | 45% | 63% | Spot ETF approved | | ETH | 68% | 28% | Approved | | SOL | 82% | 12% | Multiple applications pending approval |

Betting on Token Appreciation: Uncertainty in Altcoin Future Performance

Bitcoin, as "digital gold," possesses global liquidity consensus, while ETH/SOL lacks equivalent status. BTC has reserve asset properties, but ETH/SOL are often viewed as utility assets.

During 2024-2025, altcoins performed poorly compared to Bitcoin:

• Bitcoin's dominance continued to rise in 2024, reaching around 65%.
• Historically, altcoin seasons usually begin after Bitcoin peaks, but in this cycle, altcoins lagged behind.

When Bitcoin reached new highs, ETH and SOL were still below 50% of their historical peaks.

Capital Operation Capability: Enhanced Flexibility

Compared to Bitcoin strategic reserves, altcoin strategic reserve companies can engage more deeply in public chain ecosystem businesses to generate cash income while leveraging DeFi to improve capital utilization.

For example:

1. $SBET is chaired by the founder of Consensys, with future prospects for expanding cash flow businesses such as wallets, public chains, and staking services.
2. $DFDV acquired the validator network of the largest meme coin $BONK on Solana, with commission income accounting for 34% of Q2 revenue.
3. $DFDV packages staking rewards into DeFi tradable assets through dfdvSOL, attracting on-chain capital;
4. $HYPD (formerly Eyenovia $EYEN) uses its reserved $HYPE for staking, lending, and expanding node operations and referral commission businesses;
5. $BTCS (Ethereum node and staking service provider) uses $ETH for staking and obtains low-cost funds through AAVE by using LST and BTC as collateral.

In summary, the shrinking space for regulatory arbitrage and the uncertainty of token appreciation will force altcoin reserve companies to innovate their operational models, deeply participate in on-chain ecosystems, and build cash flow through ecosystem businesses to enhance their risk resistance.

As MicroStrategy uses sophisticated capital tools to transform Bitcoin into "volatility leverage," altcoin reserve companies are attempting to solve valuation dilemmas through DeFi operations. However, the contraction of the regulatory arbitrage window, differences in token consensus strength, and inflation concerns of the PoS mechanism make this experiment still full of variables. It is foreseeable that as more traditional enterprises enter the market, the strategic reserves of crypto assets will shift from aggressive bets to rational allocations—its ultimate significance may not lie in short-term arbitrage but in promoting the entry of corporate balance sheets into the programmable era.

As Michael Saylor said, "We are not buying Bitcoin; we are building a financial system for the digital age." The ultimate test of this experiment will be whether the balance sheets can withstand dual pressures when Bitcoin enters a bear market—this is also a question that must be answered before traditional enterprises enter the market.

Disclaimer: This article is a CGV research report and does not constitute any investment advice, for reference only.

CGV (Cryptogram Venture) is a crypto investment institution headquartered in Tokyo, Japan. Since 2017, its funds and predecessor funds have participated in investments in over 200 projects. Since 2022, CGV has invested in and incubated the licensed yen stablecoin JPYW, positioning itself early in the crypto stablecoin field. Starting in 2024, CGV is entering the coin-stock and RWA markets, participating in projects like Nabite (NA) and Victory Securities (8540.HK) in private placements. Currently, CGV also has branches in Hong Kong, Silicon Valley, and other locations.