Crypto Assets Financial Companies: A New Wave of Investment Frenzy

In 2025, the Crypto Assets market ushered in a new wave of investment frenzy, with the focus on "Crypto Assets finance companies." This phenomenon can be traced back to the ICO bubble of 2017 and the NFT and crypto lending boom of 2021. For investors willing to take on high risks in pursuit of quick wealth, these finance companies listed on Nasdaq provide an excellent opportunity.

These companies primarily engage in trading through two methods: reverse mergers and special purpose acquisition company (SPAC) transactions. A reverse merger typically involves seeking a publicly listed company with a lower market value and a failed core business as a target. Subsequently, private equity investors participate in the new stock issuance, diluting the shares of existing shareholders. The new management team takes over the company, focusing on financial strategies, mainly involving the purchase of specific Crypto Assets.

The goal of this strategy is to make the company's stock trading price reach 2 to 5 times the value of its held Crypto Assets. The company can continue to issue new stocks to purchase more Crypto Assets, similar to the approach taken by MicroStrategy (MSTR). Since the stocks are sold at a price higher than the corrected net asset value (mNAV), this may create a virtuous cycle that further drives up the stock price and the price of Crypto Assets.

For early Bitcoin holders, participating in the PIPE deals of these financial companies can be very attractive. If the deal is successful, investors can sell the company's stock at a premium and then buy more Bitcoin. Even if the deal is not very successful, the management team usually commits to narrowing the discount by selling Bitcoin and repurchasing stocks or paying dividends.

As the market capitalization of these financial asset companies grows, they may be included in more indices. This will attract passive index funds, such as those managed by Vanguard, to start purchasing these stocks. Ironically, some institutional investors who originally held a critical stance towards Bitcoin may ultimately become major shareholders of these Crypto Assets companies.

Another key element of these financial asset companies is the strategic advisors or asset managers. They are typically responsible for appointing the CEO, managing financial asset strategies, and promoting the company's stock to potential investors. The compensation for these advisors is often linked to the company's market capitalization or mNAV premium, aiming to incentivize them to enhance the company's value.

However, this model also carries potential risks. Over time, investors may question the high advisory fees, especially in the face of increased market competition. Some companies may ultimately trade at prices far below their mNAV, reverting to being "zombie" companies. Only a few companies may successfully reach a large enough scale to attract major passive funds as primary shareholders.

For ordinary investors, directly purchasing a Crypto Assets ETF may be a simpler and lower-risk option. Although Crypto Assets companies offer potential high return opportunities for some investors, they also come with corresponding high risks and complexities.