Alts micro-strategies' stock prices slump 50% Who is paying for the "fake" feast?

Jessy, Golden Finance

The "micro-strategy" trend of altcoins will start to rise in May 2025.

Companies imitating micro-strategies similar to altcoins like ETH, TRX, SOL, XRP, DOGE, BNB are springing up like mushrooms after rain.

Unlike the strategy of issuing convertible bonds solely for purchasing Bitcoin by MicroStrategy, the operational path is roughly as follows: stakeholders behind these altcoins buy a shell company on the US stock market and then announce the purchase of a certain token as a reserve. Both the stock price and the token price will experience a short-term surge.

However, after a brief euphoria in stock prices, these altcoins' micro strategies have all faced a drop in stock prices. For instance, the stock price of the Ethereum version of MicroStrategy, Sharplink, reached nearly $80 per share after the news was released, but now it is below $20 per share. Currently, the largest institutional holder of Ethereum, Bitmine, reached a peak stock price of $135 on July 3, but now it is only $34 per share. Meanwhile, the micro strategy CEA Industries for BNB surged to a high of $57 on July 28, but its stock price has now fallen back to $35.

Similar to these altcoins' micro-strategies, they increase their stock issuance to raise market value and raise funds to purchase corresponding altcoins, essentially using the continuous dilution of ordinary shareholders' equity to provide cash flow for token accumulation. With a large amount of funds backing up their prices, the altcoin prices are continuously driven up, giving large holders of the altcoin the opportunity to sell at high prices, while retail investors who follow suit often buy at the peak of the stock price, becoming the final payers in this feast.

The surge in stock prices and subsequent halving

Since May 2025, several companies related to mainstream altcoins have successively replicated the "MicroStrategy" model in the US stock market. Their common operational path is: first control a shell company in the US stock market, then announce the purchase of a certain token as a "strategic reserve", subsequently raise funds through stock price appreciation, and then use the funds to increase their holdings of the token, attempting to establish a flywheel structure where the token price is linked to the company's valuation, but in reality, it is just a common left foot stepping on the right foot game in the financial world.

The Ethereum version of "MicroStrategy" company Sharplink Gaming (SBET) saw its stock price soar to nearly $80 after announcing the purchase of ETH, but it is now left with less than $20; Bitmine, which holds the most Ethereum, also rose to a peak of $135 in early July, but has now fallen back to $32.

TRON achieved its listing through a reverse merger with a Nasdaq-listed company named SRM Entertainment, which was subsequently renamed Tron Inc. The specific investment involved acquiring shares of SRM Entertainment with TRX tokens valued at 100 million dollars. SRM Entertainment plans to store this TRX in the company's treasury, establishing a "TRX reserve fund" model. After the announcement, SRM Entertainment's stock price surged by 533% on June 16, skyrocketing from $1.45 to $9.19, with an intraday high of $10.83. The current price is relatively stable at nearly $9.

Even DOGE has its own "microstrategy": This July, Nasdaq-listed company Bit Origin announced that it has raised $500 million (of which $400 million comes from equity financing and $100 million from debt) to establish a DOGE treasury, while another listed company, Thumzup Media, had already approved the establishment of a $250 million cryptocurrency treasury including DOGE before Bit Origin. Currently, the stock price of the former has already been cut in half from its peak after the announcement.

The most recent topic of interest is BNB's micro strategy. First, CEA Industries (VAPE) (which has investments from YZi Labs) announced on July 28 that it will conduct a $500 million public equity private placement (( PIPE). This PIPE includes $400 million in cash and $100 million in cryptocurrency, as well as potential proceeds of up to $750 million from the exercise of warrants. The company will use these funds to create a BNB Chain (( BNB )) cryptocurrency treasury. Following the announcement, the stock price skyrocketed from $8.9 to $57 on the same day, and then sharply corrected to around $40 the next day, with the current stock price at $35. Another company, Chinese microchip manufacturer Nano Labs (NA), announced at the end of June that it would purchase $1 billion in BNB through the issuance of $500 million convertible bonds, intending to hold 5-10% of the circulating supply long-term. Following the news, the stock price once doubled to around $15, but has now fallen to around $6.

Who is footing the bill for the accumulation strategy of altcoin micro-strategies?

At first glance, these altcoin projects seem to replicate the operational logic of MicroStrategy, appearing to use cryptocurrency as a reserve to reflect their belief in the long-term value of blockchain. However, in reality, this is a packaged capital game, where the core is not to create value, but to artificially tie the coin price to the stock price, creating a temporary illusion of market capitalization through rounds of issuance.

Its operational logic is very clear: the project party or controlling person manipulates the listed company to issue announcements about holding tokens, simultaneously stimulating speculation in the cryptocurrency and US stock markets, driving up stock prices; then they obtain financing through targeted issuance (such as ATM, PIPE, convertible bonds, etc.) to buy back relevant tokens. The key to this operation lies in rhythm control - rising token prices drive up stock prices, rising stock prices create financing space, and once financing is completed, it pushes token prices further, allowing the flywheel to continue spinning.

But the problem is that all of this is built on emotions and valuations, lacking intrinsic value support. The tokens themselves do not generate cash flow, and the company cannot stabilize its profits from holding tokens. The financing brought by the issuance is actually a trade-off for short-term liquidity by diluting the equity of common shareholders, achieving "exchanging shares for tokens."

When enthusiasm fades, the price of the currency stops rising, or financing capabilities are restricted, this structure will quickly collapse. The price of the currency begins to decouple from the stock price, the financing window closes, and the company can no longer maintain its increase and support for the tokens. Altcoins lose their largest buyers, and the market value bubble bursts accordingly.

Meanwhile, those investors who bought company stocks at high points became the ultimate payers in this false prosperity. The danger of this model lies in the fact that it transfers the risks of crypto assets to the stock market, creating a cross-market Ponzi scheme: sentiment-driven news pushes up stock prices, stock prices drive financing, financing drives coin purchases, and coin prices rise.

Once the chain is broken, the collapse comes even faster. First of all, if the token price falls below the company's average entry cost, the company's balance sheet will deteriorate rapidly. Additionally, such operations currently hit the loophole of regulatory lag. When regulators halt this kind of financing to buy coins, there is no doubt that both stock prices and coin prices will bleed profusely. What is even more foreseeable is that perhaps when the emotional surge and capital withdrawal occur, the price decline will not be a rapid spiral to zero like Luna, but rather the stock price will find it difficult to return to its peak. By then, the flywheel will no longer turn, leaving only a mess of market value and a group of ignorant retail investors who bought in at high levels.