Blockchain Concept Stocks: A New High Ground for Liquidity Outside the Crypto World

As the global financial regulatory environment gradually clarifies, the cryptocurrency market is moving from niche circles to the mainstream financial system. After Trump was elected president, he adopted a more friendly attitude towards the cryptocurrency industry, including establishing a national Bitcoin reserve and encouraging the U.S. to expand Bitcoin mining activities, which boosted market confidence. In the following days, the capital market experienced widespread transmission, with multiple Blockchain concept stocks generally rising.

Currently, more and more listed companies have realized the enormous potential of Blockchain technology and have incorporated it into their corporate strategic layout. Many companies in the Blockchain concept stock sector are experiencing strong growth and gaining significant attention and investment in the market. These companies are driving business digital transformation and value creation by introducing Blockchain technology, gradually becoming important players in the industry.

In recent years, especially with the regulatory dividends brought by the US's launch of cryptocurrency-related ETFs, it marks that cryptocurrencies are no longer confined to a closed digital currency market but are deeply integrated with traditional capital markets. Data shows that a certain Bitcoin spot ETF has reached an asset management scale of $17.243 billion, almost always in a state of net inflow since the beginning of the year. Another major ETF has an asset management scale of $13.659 billion, demonstrating investors' interest and confidence in this emerging asset class.

The current total market capitalization of the cryptocurrency market is approximately $3.2 trillion and can be divided into the following three main categories by asset type:

1. Bitcoin(BTC) Bitcoin, as the core asset of the entire crypto market, currently has a market capitalization of about $1.9 trillion, accounting for over 50% of the total market capitalization of cryptocurrencies. It is not only recognized by both traditional finance and the native crypto world as a store of value but also, due to its anti-inflation characteristics and limited supply, has become a top choice for institutional investors, being dubbed "digital gold." Bitcoin plays a key hub role in the crypto market, stabilizing the market while providing an interconnected bridge between traditional assets and native on-chain assets.

2. Native on-chain assets Including public chain tokens ( such as Ethereum ETH), decentralized finance ( DeFi) related tokens, as well as functional tokens in on-chain applications, etc. This field has a wide variety of types and high volatility, with its market performance driven by technological updates and user demand. Currently, the market capitalization is approximately $1.4 trillion, which is much lower than the market's expected high growth.

3. The combination of traditional assets and crypto technology This field covers emerging projects such as the tokenization of on-chain real-world assets ( RWA ) and blockchain-based securitized assets. Currently, its market value is only a few hundred billion dollars, but as blockchain technology becomes more widespread and deeply integrated with traditional finance, this field is rapidly developing. By tokenizing traditional assets to enhance liquidity, it is also one of the main driving forces for growth in the future crypto market. This part will promote the transformation of traditional finance towards a more efficient and transparent digital direction and unleash huge market potential.

Why is the growth potential of traditional assets highly regarded?

In the past six months, the asset attributes of Bitcoin have undergone a new evolution, and the dominant force in the capital market has also completed the transition from old powers to new funding sources.

In 2024, the status of cryptocurrency in the traditional financial sector will be further consolidated. Several financial giants have successively launched exchange-traded products for Bitcoin and Ethereum, providing institutional and retail investors with more convenient channels for digital asset investment, which further confirms the connection with traditional securities.

At the same time, the trend of tokenizing real-world assets ( RWA ) is also accelerating, further enhancing the liquidity and coverage of financial markets. For example, the German state development bank issued two digital bonds totaling 150 million euros in 2024 using Blockchain technology. These bonds are settled through Distributed Ledger Technology ( DLT ). A French computer equipment manufacturer issued corporate bonds, utilizing tokenization to provide capital support for its new manufacturing facility in India, which also shows that traditional financial institutions are leveraging Blockchain technology to optimize operational efficiency, and many financial institutions have already integrated crypto technology into their business models.

Nowadays, a funding circulation model centered around Bitcoin as the core asset, utilizing ETFs and the stock market as the main channels for capital inflow, and leveraging publicly listed companies as the carrying platform, is continuously absorbing dollar liquidity and fully unfolding.

The combination of traditional finance and Blockchain will give birth to more investment opportunities than native on-chain assets. Behind this trend reflects the market's emphasis on stability and practical application scenarios. The traditional financial market has a solid infrastructure and mature market mechanisms, and after combining with Blockchain technology, it will unleash greater potential.

From these perspectives, it can be seen that the future development of the crypto market is not only about the incremental growth of digital currencies themselves but also about the enormous potential for integration with traditional finance. From regulatory dividends to changes in market structure, Blockchain concept stocks are at a critical juncture in this major trend, becoming the focus of global investors.

The current blockchain concept stocks can be roughly divided into the following categories:

1. Asset-Driven Concept:

Regarding the blockchain stocks of asset allocation concepts, the company's strategy is to use Bitcoin as the main reserve asset. This strategy was first implemented by a certain company in 2020 and quickly attracted market attention. This year, other companies such as Japanese investment firms and Hong Kong listed companies have also joined in, with the acquisition volume of Bitcoin continuously increasing. A certain Japanese company announced the introduction of the key performance indicator "Bitcoin Yield" (BTC Yield), with a third-quarter BTC Yield of 41.7%, and in the fourth quarter ( as of October 25 ) reaching as high as 116.4%.

Specifically, some companies' strategy is to introduce "Bitcoin Yield" as a key performance indicator to provide investors with a new perspective for evaluating the company's value and investment decisions. This indicator is based on the diluted number of outstanding shares and calculates the number of Bitcoins held per share, disregarding Bitcoin price fluctuations. It aims to help investors better understand the company's actions in purchasing Bitcoins through the issuance of additional common stock or convertible instruments, focusing on measuring the balance between the growth of Bitcoin holdings and equity dilution. As of now, a certain company's Bitcoin investment yield has reached 41.8%, indicating that the company has successfully increased its holdings while avoiding excessive dilution of shareholder interests.

However, despite the significant achievements made by a certain company in Bitcoin investments, the company's debt structure has still attracted market attention. Reports indicate that the company's current total outstanding debt is $4.25 billion. During this period, the company has financed through multiple rounds of issuing convertible bonds, some of which are accompanied by interest payments. Market analysts are concerned that if the price of Bitcoin were to drop significantly, the company might need to sell some of its Bitcoins to repay its debts. However, there are also views that, due to the company's reliance on its stable traditional software business and low interest rate environment, its operating cash flow is sufficient to cover debt interest, so even if Bitcoin prices plummet, it is unlikely to force the company to sell its Bitcoin assets. Furthermore, the company's stock market value currently reaches $43 billion, and the proportion of debt in its capital structure is relatively small, which further reduces the liquidation risk.

Despite many investors being optimistic about the company's firm Bitcoin investment strategy, believing it will bring substantial returns to shareholders, some investors are concerned about its high leverage and potential market risks. Given the extreme volatility of the cryptocurrency market, any unfavorable market changes could significantly impact the asset value of such companies, and their stock prices are trading at a significant premium relative to their net asset value, raising questions about whether this situation can be sustained. If the stock price experiences a correction, it may affect the company's financing ability, thereby impacting its future Bitcoin purchasing plans.

1、Microstrategy(MSTR)

The company was founded in 1989, initially focusing on business intelligence and enterprise solutions. However, starting from 2020, the company transformed into the world's first publicly listed company to use Bitcoin (BTC) as a reserve asset, a strategy that fundamentally changed its business model and market position. The founder played a key role in driving this transition, evolving from an early Bitcoin skeptic to a staunch supporter of cryptocurrency.

Since 2020, the company has continuously purchased Bitcoin through its own funds and bond financing. As of now, the company has accumulated approximately 279,420 Bitcoins, with a current market value of nearly $23 billion, accounting for about 1% of the total Bitcoin supply. The most recent purchase occurred between October 31 and November 10, 2023, where 27,200 Bitcoins were acquired at an average price of $74,463. The average holding price of these Bitcoins is $39,266, while the current Bitcoin price has reached about $90,000, resulting in a paper profit of nearly 2.5 times.

Despite facing a paper loss of about $1 billion on its Bitcoin investments during the bear market in 2022, the company has never sold its Bitcoin and instead chose to increase its holdings. Since 2023, the strong rise in Bitcoin has significantly boosted the company's stock price, with a year-to-date investment return rate reaching 26.4% and a cumulative investment return rate exceeding 100%. The company's current operating model can be seen as a "BTC-based cyclical leverage model," raising funds through bond issuance to purchase Bitcoin. While this model offers high returns, it also carries certain risks, especially during periods of extreme volatility in Bitcoin's price. According to analysis, the company may face liquidation risk only if Bitcoin's price falls below $15,000, and given that the current Bitcoin price is close to $90,000, this risk is minimal. Additionally, the company's leverage ratio is low, and there is strong demand in the bond market, which further enhances the company's financial stability.

For investors, the company can be seen as a leveraged investment tool in the Bitcoin market. With the expectation of a steady rise in Bitcoin prices, the company's stock holds significant potential. However, it is important to be wary of the medium- to long-term risks that may come from debt expansion. In the next 1 to 2 years, the company's investment value remains worthy of attention, especially for investors who are optimistic about the prospects of the Bitcoin market; this is a high-risk, high-return asset.

2、Semler Scientific(SMLR)

Semler Scientific is a company focused on medical technology, and one of its innovative strategies is to use Bitcoin as its primary reserve asset. In November 2024, the company disclosed that it had recently acquired 47 Bitcoins, increasing its total holdings to 1,058 coins, with a total investment amounting to approximately $71 million. Part of the funding for these acquisitions comes from operating cash flow, indicating that the company is attempting to strengthen its asset structure through its Bitcoin holdings, positioning itself as a representative of innovation in asset management.

However, Semler's core business still focuses on its QuantaFlo device, which is primarily used for diagnosing cardiovascular diseases. Nonetheless, Semler's Bitcoin strategy is not just a financial reserve; in the third quarter of 2024, the company realized an unrealized gain of $1.1 million from its Bitcoin holdings. Despite a 17% year-over-year decline in revenue for that quarter, it still provided Semler with a financial hedge amid economic fluctuations.

Although Semler's current market value is only $345 million, well below that of some companies, its strategy of adopting Bitcoin as a reserve asset has led investors to view it as a "mini-MicroStrategy."

3. Boya Interactive

Boyaa Interactive is a publicly listed company primarily engaged in gaming, ranking among the top developers and operators in China's chess and card game industry. It began exploring the crypto market in the second half of last year, aiming to fully transform into a Web3 listed company. The company has made large-scale purchases of crypto assets such as Bitcoin and Ethereum, invested in multiple Web3 ecosystem projects, and entered into a strategic cooperation with an institution for Web3 game development and the Bitcoin ecosystem. The company has stated: "Purchasing and holding cryptocurrencies is an important measure for our group to develop and layout Web3 business, and is also an important part of our group's asset allocation strategy." As of the latest announcement, Boyaa Interactive holds 2,641 Bitcoins and 15,445 Ethereum, with total costs of approximately $143 million and $42.578 million, respectively.

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