More and more publicly traded companies are beginning to "reserve cryptocurrency."

They are no longer just purchasing BTC or ETH, but are following MicroStrategy's example, establishing a replicable financial model: through PIPE, SPAC, ATM, Convertible Bonds, and other traditional financial instruments, they engage in large-scale financing, accumulation, and promotion, overlaying the new narrative of the "on-chain treasury" to include Bitcoin, Ethereum, SOL, and other cryptocurrencies in the company's core balance sheet.

This is not just a change in asset allocation strategy, but also a new kind of "financial engineering": a market experiment jointly driven by capital, narrative, and regulatory loopholes. Institutions such as UTXO Management, Sora Ventures, Consensys, Galaxy, Pantera, among others, have successively entered the scene, facilitating several fringe-listed companies in completing a "transformation" to become "crypto-reserve monster stocks" on the US or Hong Kong stock markets.

However, this seemingly innovative capital feast is also triggering the vigilance of old-school finance professionals. 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 stock to buy coins, without actual business support. "There are announcements of billions every day, just like the madness back then," he said.

This article examines the four key tools and representative cases behind this trend, attempting to answer a question: When traditional financial instruments meet crypto assets, how can a company evolve from "buying coins" to "playing the game"? And how can retail investors identify the risk signals in this capital game?

How do Financing Tools Build a "Coin-Buying Company"?

PIPE: Institutional Discounted Entry, Retail FOMO at Highs

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 approval process and can inject funds quickly, making it a "strategic transfusion" tool in tight financing windows or uncertain market conditions.

In the cryptocurrency treasury trend, PIPE has been given another function: to create a signal of "institutional entry," driving a rapid stock price increase and providing "market validation" for the project narrative. Many publicly traded companies originally unrelated to crypto incorporate funds through PIPE, purchasing large amounts of BTC, ETH, or SOL, rapidly transforming into a new identity as a "strategic reserve company." For example, after announcing a $425 million PIPE financing to establish an ETH treasury, SharpLink Gaming (SBET) saw its stock price skyrocket over tenfold in a short period.

However, the impact of PIPE goes far beyond surface-level benefits. In terms of structure design, PIPE investors typically have a better entry price, unlocking schedule, and liquidity channel. Once the company files an S-3 registration statement, the related shares can be listed for trading, and institutional investors can 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 cash out," triggering market panic.

SharpLink's experience is a typical case: on June 12, 2025, the company filed an S-3 registration statement, allowing PIPE shares to be listed for resale. Despite Chairman and Ethereum co-founder Joseph Lubin publicly clarifying that "this is a standard PIPE follow-up process in tradfi," and stating that he and Consensys had not sold any shares, the market sentiment was irreversibly damaged. The stock price plummeted by 54.4% over the following five trading days, becoming a textbook example of the structural risk of the PIPE model. Although the stock price saw a rebound later on, the drastic "pump and dump" reflected a structural fault line in the PIPE process.

Furthermore, BitMine Immersion Technologies (BMNR) also staged a "pump and dump" drama after announcing its PIPE structure. Following the announcement of a $2 billion PIPE financing for Ethereum treasury development, the stock price surged and then collapsed, dropping by nearly 39% in a single day, becoming one of the four high-risk "crypto treasury stocks" mentioned in the Unchained report.

The fundamental risk of 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 the positive narratives such as "successful financing" or "coin-based treasury" and passively bear the risk when the unlocking selling pressure looms. In the traditional financial markets, this "pump first, dump later" structure has long been a subject of controversy. In the less regulated and more speculative crypto space, this structural imbalance is further exacerbated, becoming another side of the risk in a capital narrative-driven market.

SPAC: Putting Valuation in a Press Release Instead of a Financial Report

SPAC (Special Purpose Acquisition Company) was originally a tool used in the traditional market for reverse mergers: a group of sponsors first establish a shell company, raise funds through an IPO, and then within a specified time frame, find and acquire a privately held company, allowing the latter to bypass the conventional IPO process and achieve "fast-track listing."

Meanwhile, in the cryptocurrency 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 revenue source. Their core strategy is to first use PIPE financing to purchase cryptocurrency, build a "coin-based" balance sheet, and then utilize a SPAC merger to enter the public market, packaging to investors a "hold coins and grow" investment narrative.

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 that Bitcoin into a stock ticker. For example, Twenty One Capital holds over 30,000 Bitcoins, merged with a SPAC backed by Cantor Fitzgerald, and raised $5.85 billion through PIPE and convertible bond financing, with some of the funds used for on-chain yield strategies and Bitcoin financial product development. ProCap, supported by Pompliano, focuses on developing lending and staking businesses around a Bitcoin treasury. ReserveOne is more diverse, holding assets such as BTC, ETH, SOL, participating in institutional-grade staking and OTC lending.

In addition, these companies are usually not satisfied with just "hodling." They often further issue convertible bonds, issue new shares to raise more funds to buy more Bitcoin, forming a "structural leverage model" similar to MicroStrategy's. As long as the coin price rises, the company's valuation can inflate 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 theoretically can be completed in 4–6 months, with more flexible narrative space. Founders can tell a future story without disclosing existing revenue, lead valuation negotiations, and retain more equity. Although in reality such crypto projects often face a longer regulatory review period (such as Circle ultimately abandoning the SPAC route for an IPO), the SPAC path remains popular, especially for those "coin-based companies" that have not yet established revenue-generating capabilities, as it provides a shortcut around product, user, and financial fundamentals.

More importantly, the "publicly traded company" status brought by SPACs has a natural legitimacy in investor perception. Stock tickers can be included in ETFs, traded by hedge funds, and listed on Robinhood. Even though the underlying asset is digital currency, the packaging aligns with the language system of traditional finance.

Moreover, such structures often carry strong "signal value": once a large PIPE financing is announced or a partnership with a well-known financial institution is completed, retail investor sentiment can be quickly activated. Twenty One Capital has garnered market attention precisely because it is backed by endorsements from entities like Tether, Cantor, and SoftBank, even though the company's actual operations have not yet begun.

However, SPACs do not only bring convenience and prestige; their structural risks are also significant.

Business Model Stagnation and Narrative Overstretch: Many companies that SPACs merge with lack stable revenue themselves, and their valuation highly depends on whether the "Bitcoin strategy" can continue to attract attention. Once market sentiment reverses or regulation tightens, the stock price will quickly plummet.

Institutional Preferential Structure Imbalance: Sponsors and PIPE investors typically enjoy enhanced voting rights, early unlock periods, pricing advantages, and other privileges, leaving retail investors at a dual disadvantage in terms of information and rights, resulting in severe equity dilution.

Compliance Operations and Disclosure Challenges: After completing a merger, the company must fulfill obligations of a public company, such as audits, compliance, risk disclosure, especially in a context where digital asset accounting rules are not yet well-established, making it prone to financial reporting chaos and audit risks.

Valuation Bubble and Redemption Mechanism Pressure: SPACs often experience a high valuation due to narrative expectations early in their listing, and if retail investors engage in large-scale redemption during a sentiment reversal, it will lead to cash flow constraints for the company, anticipated financing failures, or even trigger secondary bankruptcy risks.

The more fundamental issue is that SPAC is a financial structure, not a value creator. It is essentially a "narrative vessel" that packages Bitcoin's future vision, institutional endorsement signals, and capital leverage plans into a tradable stock ticker. When Bitcoin is rising, it seems more attractive than an ETF; however, when the market reverses, its complex structure and fragile governance will be more thoroughly exposed.

Related Reading: "2024 Cryptocurrency IPO Boom: SPACs Overtake Traditional Shell Mergers as Bitcoin Companies Charge Ahead"

ATM: Printing Money Anytime, More Bearish, More Aggressive

ATM (At-the-Market Offering), originally a flexible financing tool that allows a publicly traded company to sell its shares to the public market in stages at market prices to raise funds in real-time. In traditional capital markets, it is often used for hedging operational risks or supplementing cash flow. In the cryptocurrency market, ATM has been given another function: to serve as a strategic reserve for companies to buy more Bitcoin at any time and maintain liquidity through a "self-service financing channel."

The typical practice is as follows: a company first constructs a Bitcoin treasury narrative, then initiates an ATM (At-The-Market) offering plan. Without specifying a price or a time window, the company continuously sells shares to the market in exchange for cash to purchase more Bitcoin. Unlike a PIPE (Private Investment in Public Equity) offering that requires specific investors or an IPO (Initial Public Offering) with a complex disclosure process, the ATM offering is more suitable for asset-allocation-focused companies with a flexible approach and narrative-driven strategy.

For example, the Canadian publicly listed company LQWD Technologies announced in July 2025 the initiation of an ATM offering plan, allowing it to irregularly sell up to 10 million Canadian dollars of common stock to the market. In its official statement, the ATM plan "enhances the company's Bitcoin reserve capabilities 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 entered into ATM agreements with multiple underwriters, planning to raise up to $150 million through this mechanism and has formally filed with the SEC. Its official documents state that this will help the company raise funds based on market dynamics without the need for pre-set financing windows or trigger conditions.

Related Articles: "Publicly Listed Company LQWD Initiates ATM Plan to Rapidly Increase Bitcoin Holdings" "BitFuFu Plans $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 (typically on Form S-3) detailing the issuance size and plan, and are subject to dual regulation by the SEC and FINRA, the issuance can occur at any time without specific price or time disclosures. This "no-notice" issuance mechanism is particularly sensitive during a stock price decline and can easily trigger a "death spiral dilution," leading to weakened market confidence and shareholder value erosion. Due to significant information asymmetry, retail investors are more likely to passively assume risks during this process.

Additionally, ATM is not suitable for all companies. If a company does not hold the status of a Well-Known Seasoned Issuer (WKSI), it also needs to comply with the "one-third rule," which stipulates that fundraising through ATM within 12 months cannot exceed one-third of its public float market value. All transactions during the issuance process must be completed through regulated brokers, and the company must also disclose fundraising progress and fund usage in financial reports or through 8-K filings.

Overall, ATM is a means of centralizing 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 for Bitcoin and Ethereum accumulation. For the founding team, this is an extremely attractive path; however, for investors, it may mean passive dilution without warning. Therefore, behind this "flexibility" lies a long-term test of governance ability, transparency, and market trust.

Convertible Bond: Financing + Arbitrage, a Dual Strategy

A Convertible Bond is a financing instrument with both debt and equity characteristics, allowing investors to enjoy bond interest while retaining the right to convert the bond into company stock, providing a dual path of "fixed-income security" and "equity potential" benefits. In the crypto industry, this tool is widely used for strategic financing, especially favored by companies that wish to raise funds for "Bitcoin accumulation" without immediately diluting their shares.

Its appeal lies in the fact that for companies, convertible bonds can be used to raise large amounts of funds at a relatively low interest rate (even zero); for institutional investors, it provides an arbitrage opportunity of "downside protection while participating in stock price appreciation." Many mining companies, stablecoin platforms, and on-chain infrastructure projects have introduced strategic funds through convertible bonds. However, this also sets the stage for dilution risk: once the stock price reaches the conversion condition, the bonds will quickly convert to stocks, 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-type accumulation." Since 2020, the company has issued two convertible bonds, raising a total of $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 even a 0% rate, 6-year term, and a conversion price of $1432 (a 50% premium), still receiving $1.05 billion oversubscription. MicroStrategy leveraged its holdings of over 90,000 Bitcoins at an almost zero cost, achieving a super-accumulation of Bitcoin with nearly zero leverage costs. Its CEO, Michael Saylor, has been dubbed the "world's biggest crypto gambler" due to this.

However, this model is not without its costs. MicroStrategy's financial leverage far exceeds traditional corporate standards, and once the Bitcoin price drops significantly, the company's net assets may turn negative. As shown in an IDEG report, if BTC falls below $17,500, MicroStrategy would face a situation of insolvency. In addition, since its convertible bonds are in the form of private placements, with some mandatory redemption and conversion terms undisclosed, it also exacerbates 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, convertible bonds are a double-edged sword: they provide enterprises with a high degree of flexibility between "financing without dilution" and "strategic accumulation," but they 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 and end up as the ultimate bearers of dilution pressure.

Epilogue: Above Narrative, Structure Is King

On July 18, Wall Street's famous short seller Jim Chanos compared this "cryptocurrency treasury frenzy" to the 2021 SPAC craze in a podcast, where within three months, $90 billion was raised but eventually collapsed collectively, leading to massive losses. He pointed out that the difference this time is that companies are purchasing Bitcoin through issuing convertible bonds and preferred stock without actual business support. "We can see billion-dollar announcements almost every day," he said, "which is identical to the madness of the SPAC back then."

Related reading:《Wall Street Big Short Warning: Corporate Bitcoin Treasury Frenzy Echoes SPAC-Style Bubble Risk》

Meanwhile, a report from "Unchained" further points out that such "crypto treasury companies" face severe structural risks. The report lists representative projects such as SATO, Metaplanet, Core Scientific, indicating that their true net asset value (mNAV) is far below market valuation, coupled with issues of unclear disclosure, inadequate treasury quality, complex structure, etc. Once market sentiment reverses, these companies are highly likely to transform from "crypto reserves" to "financial nuclear bombs."

Related reading:《These 4 Crypto Treasury Companies Are Ready for a Price Crash》

For the average investor, "Corporate Coin Purchase" 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's price itself, but the way the capital structure is designed.

PIPE determines who can enter at a discount, who is responsible for buying the remaining shares; SPAC determines whether a company can bypass financial scrutiny and just tell a story; ATM decides whether the company is still "selling on the dip" when the stock price drops; convertible bonds determine when someone suddenly converts bonds into shares and initiates a concentrated sell-off.

In these structures, retail investors are often placed at the "end of the line": without privileged information and no liquidity protection. What seems like an investment in "believing in crypto" actually entails exposure to multiple risks such as leverage, liquidity, and governance structure.

Therefore, when financial engineering enters the narrative battlefield, investing in a crypto company is no longer just about being bullish on BTC or ETH. The real risk lies not in whether the company holds coins but in whether you can understand how it is "playing the game."

How market capitalization inflates with the coin price, and then how it, in turn, unleashes selling pressure through the structure—the design of this process determines whether you are participating in growth or setting off the fuse for the next round of a crash.

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