In the crypto world, VC has brought the story of 20 trillion dollars to Wall Street.

U.S. stocks are looking towards crypto assets, and the VC in the crypto world that hasn't given up intends to make another attempt.

Written by: Rhythm BlockBeats

Suddenly, it seems that what attracts the most attention in the US stock market is no longer AI, but a bunch of junk companies on the verge of delisting. In recent months, the US capital market has been experiencing a large-scale surge in reverse merger cases with increasing amounts at an unprecedented speed.

Public companies have completely abandoned their original core businesses, turning crypto assets into their fundamentals, with stock prices soaring several times or even dozens of times in a short period. Now, the US stock market has become a playground for the crypto world to conduct financial experiments. This time, the crypto world VC has really told the story to Wall Street.

US stock market, the "firestarter" is setting off DAT fireworks

Three months ago, when investing in Sharplink, Primitive Ventures never expected that this new crypto track in the US stock market would become so crowded in such a short time. "At that time, not many people were discussing these investment cases, and it couldn't be compared to the current market heat, but it has only been a month or two," said Primitive partner Yetta.

In June this year, Sharplink Gaming announced the completion of a $425 million financing, becoming the first Ethereum reserve company listed on the US stock market. After the news was released, the company's stock price soared, rising more than 10 times at one point. Primitive, as the only fund in the Chinese crypto world to participate in this investment case, has attracted attention in the community.

"Because we found that the liquidity in the crypto market is not good, yet the purchasing power on the institutional side is very strong, the Bitcoin ETF volume has always been good, and the OI of Bitcoin options on CME even exceeds that of Binance." In April last year, Primitive held an internal meeting for a major review, and since then they set a new investment direction of "the fusion of CeFi (Centralized Finance) and DeFi (Decentralized Finance)." Now, they have become one of the busiest VCs in the crypto world.

Nowadays, Primitive receives emails from investment banks every day, inviting the fund to participate in investments in encryption reserve companies. In this wave of investment, investment banks play the role of intermediaries, responsible for helping project parties find and coordinate all investors, and assist teams in conducting roadshows for investors.

In the past month, Primitive has discussed no less than 20 crypto assets reserve projects. However, currently, the only projects they have publicly invested in are Sharplink and another company, MEI Pharma, which is doing Litecoin reserves. This cautious investment approach stems from concerns about an overheated market, and since May of this year, the team has begun closely monitoring various top signals.

"We do feel that the level of market bubble is significantly higher than it was a few months ago," Yetta told Dongcha Beating. The team now produces market reports daily and assesses suitable exit strategies based on the situation. "Crypto assets reserve companies are a financial innovation, and you can be bullish on their underlying assets in the long term, but there is also a risk of severe deleveraging and bubble bursting when the market declines."

Unlike Primitive, Pantera is rolling up its sleeves and preparing for a big push. This established crypto VC with a 12-year history has even created a new term for the field – DAT (Digital Asset Treasury). In early July, Pantera established a new fund named the DAT Fund.

In the fundraising memorandum, Pantera partner Cosmo Jiang wrote: "As an investor, it is very rare to find oneself at the starting point of a new investment category, recognizing this and responding quickly to seize early investment opportunities is crucial."

The story that Pantera tells investors is very simple: if a company has a growing amount of Bitcoin Per Share each year, then holding the company's stock will give you more and more Bitcoin.

The underlying logic of Bitcoin reserve companies led by MicroStrategy, as well as other crypto asset reserve companies, is to finance the market through financial instruments such as directed issuance, convertible bonds, and preferred stocks when there is a premium on the value of crypto assets on their market capitalization. Due to the premium on the stocks, the company can accumulate more assets at a lower cost.

Investors generally use the mNav indicator (Market Cap To Net Asset Value) to measure their premium multiplier to assess a company's financing ability. "Clearly, the stock market is volatile, and sometimes the market overestimates certain assets. At this time, launching financial tools for financing essentially means selling this volatility. From this perspective, the premium can actually be maintained in the long term," Cosmo told Dongcha Beating.

In April this year, Pantera invested in Defi Development Corps (DFDV), which reserves Solana public chain token SOL. This is the first company in the US stock market to use Crypto Assets other than Bitcoin as reserve assets, and its stock price has increased more than 20 times in the past 6 months.

However, for Pantera, this is definitely a counter-consensus investment, as at the beginning of the project, no one was willing to invest in it, and almost all of the company's $24 million financing came from Pantera.

Most members of DFDV come from senior positions at Kraken, and the CFO has also operated Solana validation nodes. The team's in-depth understanding of Solana and their expertise in traditional finance were key factors in impressing Pantera. "Nevertheless, we have also set up some downside protection measures in the trading structure, but the astonishing success of DFDV was something we completely did not anticipate."

"I believe the real catalyst is Coinbase being included in the S&P 500 index, which forces all fund managers around the world to consider crypto in their evaluations." Since Trump's election, the crypto industry has been making significant strides in traditional capital markets, with Circle's IPO attracting global attention to stablecoins, and Robinhood's foray into RWA pushing security tokenization to the forefront. Now, DAT is becoming the new concept of relay.

Investing in DFDV for less than a month, Cantor Equity Partners also came knocking. The success of DFDV accelerated SoftBank's and Tether's plans for a Bitcoin reserve company, ultimately leading CEP to raise about $300 million in external funding, with Pantera once again becoming its largest external investor.

The investment in DFDV and CEP comes from the Pantera flagship venture fund and the liquid token fund. The team initially thought these would be the only two investments the fund would make in this field.

However, the market's development quickly exceeded Pantera's expectations. Due to the limitations in the investment portfolio framework and concentration of the aforementioned two funds, Pantera soon made the decision to establish a new fund.

On July 1, the DAT Fund started fundraising with a target of $100 million. On July 7, it was officially announced that the fundraising was completed. Due to high enthusiasm from LPs, Pantera subsequently launched the fundraising for the second DAT Fund. By mid-month, when accepting an interview with Beating, all funds from the first DAT Fund had already been fully deployed.

In publicly disclosed investment cases, Pantera often plays the role of an "Anchor", being the largest investor. Due to the poor initial liquidity of DAT Company, it is prone to discounts, which is when the team needs to bring in heavyweight investors off-market to build a foundational base, ensuring liquidity and narrowing the price spread.

On the other hand, "Anchor Investor" is also a strategy used by Pantera to enter the market. "In the past two months, we have received nearly a hundred proposals from DAT companies. Pantera is usually the first call they make because we entered the field early enough to establish a leading recognition, and they also see that when we invest, we are truly substantial investors willing to make big bets."

Of course, Pantera does not invest in every opportunity they encounter. For DAT Company, the fund also values their ability to create "cognitive leadership" in marketing. Their investment in Sharplink and Bitmine is largely based on this consideration. Among them, Bitmine is the first investment of DAT Fund, and Pantera also played an "Anchor" role in the transaction.

On June 2, Joseph Lubin, a key figure in the Ethereum community, led the completion of the Sharplink reverse acquisition, resulting in the birth of the first Ethereum reserve company. On June 12, Joseph and other Ethereum core members released the Ethereum fundamentals report through Etherealize, introducing the investment value of Ethereum to institutions.

On June 30, the second Ethereum reserve company Bitmine was born, with "Wall Street crypto expert" Thomas Lee stepping up to endorse it and beginning to frequently appear in mainstream media to interpret investment opportunities in Ethereum. At the same time, Sharplink's stock price began to rise, and the "Ethereum arms race" quickly became the hottest topic in the industry.

"To truly open the channel for financial leverage, DAT Company's market capitalization needs to reach at least 1 to 2 billion dollars," Cosmo told Dongcha Beating, stating that only by reaching this scale can the company genuinely obtain valuation premiums in the market and unlock another door to institutional capital through tools such as convertible bonds or preferred stocks.

But before that, DAT Company needs to tell the story to ordinary investors, not just those who are native to crypto, but to a broader mainstream retail group in the stock market. "They must understand this story and be willing to get involved. The market must first 'believe it will be realized' for the whole model to work."

Establishing continuous trust with the market is another key factor for the success of DAT Company. Traditional financial markets require the assurance of "transparency + discipline". The team must be sufficiently "Crypto Native" while also possessing the acumen of traditional finance, effectively managing and disclosing information for publicly listed companies, and clearly understanding the rules and processes of the SEC, in order to ensure that the company can efficiently and professionally access the U.S. capital market.

"We will spend a lot of time conducting due diligence. What truly matters is not the static number of mNav. Is there a clear management structure? Can financing be conducted stably? Is there the capability to build new business models? That is what makes a truly excellent 'DAT entrepreneurial team.'"

In addition to Bitcoin, Ethereum, and Solana reserves, Pantera has recently invested in several other large-cap altcoin reserve companies. From Bitcoin to mainstream coins to altcoins, the stories told to investors in the crypto world are layered: compared to Bitcoin, which relies entirely on financial engineering for growth, mainstream tokens can generate returns through staking and DeFi activities, while altcoin protocols have mature application scenarios and income as their fundamentals in the encryption market. Stock market investors can gain exposure to their growth through DAT.

Unlike the financing paths of Bitcoin and mainstream coins, the initial reserves of many altcoins DAT come directly from the protocol foundation itself or its token investors.

Hyperliquid's strategic reserve company Sonnet BioTherapeutics (SONN) initially received a direct injection of over 10 million HYPE coins purchased by top crypto VC Paradigm at the end of last year. According to insights from Beating, the establishment of the strategic reserve company StablecoinX was also led by the Ethena Foundation, where PIPE round investors can directly use their held ENA coins or USDC to participate in the financing.

Due to poor liquidity, the altcoin DAT often experiences a rapid surge after financing news is announced, which also provides insider trading opportunities for many participants in the know. In the case of SONN, the official announcement was released on July 14, but the stock price began to rise sharply from July 1, quadrupling by the night before the news was announced.

Recently, the BNB reserve company CEA backed by YZi Labs also encountered similar issues. According to Beating's report, to prevent participants from knowing the company name in advance, the team purchased several US shell companies beforehand and randomly selected one at the last moment. However, even so, there were still instances of early disclosures a few hours before the official announcement on July 28.

On the other hand, many investors are also concerned about the potential risk of "left hand to right hand" with the altcoin DAT. Due to the poor liquidity in the crypto market, it is difficult for high market cap and high-priced tokens to exit without a discount. However, by injecting crypto assets into the DAT company, the false liquidity of the token itself becomes real liquidity in the US stock market.

Therefore, it is necessary for investors to carefully distinguish between "providing growth exposure" and "seeking exit liquidity." "Many DATs choose to operate in regulatory gaps, such as being listed on low-threshold trading boards. However, such short-term operations make it difficult to establish stable information disclosure and compliance mechanisms. If true capital premiums cannot be obtained, it is merely passing the buck."

Regulation is also one of the risks faced by DAT Company. Once the SEC categorizes altcoins and other on-chain assets as securities, DAT's structure will need significant adjustments. However, even so, Primitive and Pantera still believe this is a better battlefield, "because the liquidity in the US stock market is indeed better, and public company investors have more protections. Therefore, for us, investing in DAT now is better in terms of winning chances and odds than investing purely in Crypto," Yetta said.

The world outside of the US stock market is still competing for the "first micro strategy"

The US stock market is the most efficient, inclusive, and liquid capital market, which is the consensus among investors. If one wants to replicate the next MicroStrategy, Nasdaq is still the best place. However, this does not mean that there are no opportunities in other capital markets. Outside of the US stock market, everyone’s goal is to become the next Metaplanet.

In the past year, Metaplanet's stock premium has risen sharply, bringing investors more than 10 times the return. This "Asian miracle" success has made more people see the opportunity for regional arbitrage.

The Asian market is a pioneer in Bitcoin reserves. In mid-2023, Waterdrop Capital partnered with China Pacific Insurance (Hong Kong) Co., Ltd. to establish the Pacific Waterdrop Fund, and subsequently invested in the Hong Kong-listed company Boyaa Interactive, which had just launched a Bitcoin purchasing plan. In 2024, MicroStrategy's stock surged, further confirming Waterdrop's belief in this industry trend. Currently, Waterdrop has invested in 5 Hong Kong-listed companies, with plans to invest in at least 10 before the end of the year.

"It is clear that the current Bitcoin and mainstream coin reserve companies in the US market are already very crowded, and the next incremental capital is more likely to come from markets outside the US." Nachi is a trader in the crypto world, and he is now also involved in the investment wave of reserve companies. This year, he participated in the investment of the Bitcoin reserve company Nakamoto Holdings and quickly achieved a 10-fold return.

At the beginning of the year, Nachi invested in Mythos Venture as a personal LP, which focuses on "Asian Bitcoin reserves". The latest investment was in the Thai listed company DV8, which recently announced the completion of 241 million Thai Baht in financing, becoming the first Bitcoin reserve company in Southeast Asia.

In addition, he has also personally participated in several other regional Bitcoin reserve project investments, most of which are in the 7-figure dollar range. For example, in April of this year, he completed the acquisition of Oranje, the first Bitcoin reserve company in Latin America, which received support from Brazil's largest commercial bank, Itaú BBA, and raised nearly $400 million in its first round of financing.

"We believe that markets like Japan, South Korea, India, and Australia still have room to do this (Bitcoin reserve company)." After joining Mythos, Nachi's role gradually changed from LP to "quasi-GP," looking at investment opportunities together with other members. His task is to find publicly listed companies interested in acquisition, and "shell owners" in the Asian region have become Nachi's recent intensive meeting targets.

"Striving to be the first" is the key to success in capital markets outside of the US stock market. This not only allows the team to accumulate first-mover advantages but also helps the company capture more market attention. However, this also means that the narrative of Bitcoin reserve companies' regional arbitrage is a race against time.

In the acquisition phase, the differences between shell companies are vast; some companies can be bought for $5 million, while in the case of DV8 in Thailand, several parties spent around $20 million.

From buying a shell to being listed for trading, the entire process generally takes 1 to 3 months, with regulatory approval efficiency being the main variable. However, from discovering the opportunity to getting things done, it takes at least 6 months or even longer.

The DV8 acquisition took nearly a year to complete, officially finishing in July of this year. The leading investors in this acquisition are UTXO Management and Sora Venture, who are also the main designers behind Metaplanet.

Recently, Sora has also planned and completed the acquisition of the South Korean listed software service company SGA. "The capital markets in Asia, especially Southeast Asia, are relatively closed, but the volume here is actually very large; many foreign investors just do not understand the activity level of these markets," said Luke, a partner at Sora Ventures, to Dongcha Beating.

"Everyone is rushing for time now, but I think very few can compete with Sora in the Asian market." In Luke's view, local regulations pose a significant barrier for many overseas capital, and most VCs do not have complete experience in acquisitions and communication with regulators, thus they do not really understand the Asian market.

Sora Ventures' strategy is to bring in a large number of local partners to help connect with securities exchanges and regulatory bodies, in order to accelerate the project's implementation process. In the case of the Korean SGA, the team took less than a month from the initial discussions to the final deal, setting a record for the fastest acquisition in the history of the Korean securities exchange.

The company's financing rhythm and market strategy is another threshold. "mNav is a very late-stage valuation model, and it only becomes valid after Bitcoin accumulates to a certain amount. Early companies, in terms of strategy and premium logic, are completely different from MicroStrategy." Thanks to the equity structure design of super voting rights, the US stock company DAT can ensure team control while continuously diluting equity.

However, listed companies in Asia generally do not have such mechanisms, so the team's dilution space is relatively limited. This means that the team needs to accurately grasp the rhythm of financing while conducting reverse dilution through stock buybacks using cash flow from core business operations. It is understood that Thailand's DV8 has obtained the relevant local licenses and will soon launch its crypto assets trading platform business.

Currently, Sora is accelerating the finalization of an acquisition deal in the Taiwan market while advancing its second Bitcoin reserve company in Japan. In May of this year, the team took a 90% stake in the publicly listed Hong Kong luxury distribution company Top Win, which will soon be renamed Asia Strategy. "Our goal is to create 9 to 10 'Metaplanet' in Asia and then integrate them into our publicly listed parent company in the U.S., allowing investors in the U.S. stock market to indirectly gain exposure to the premium of Asian companies."

Top Win participated in the acquisitions of companies such as Metaplanet, Hengyue Holdings, DV8, and SGA. The company is also about to complete its initial round of financing. Sora Ventures continues to adopt the "multiple players + small funds" model, with a total fundraising amount of less than 10 million USD and a 6-month lock-up period.

Luke hopes that Top Win will present a capital layout in the future with a 30% stake in Asian companies and 60% reserves in Bitcoin, to tell investors a relatively different narrative. Of course, all of this is just the team's ideas and story; whether the premium in the Asian market is sustainable and whether U.S. investors will buy into the Asian narrative remains to be validated by the market and time.

"It must be acknowledged that the Asian market has a high floor and a low ceiling; if one truly wants to achieve a certain scale, it can only be done in the U.S. stock market, which attracts investors and players from all over the world." Despite investors trying to chase the Bitcoin reserve narrative's Alpha in various countries, all investors share a consensus that the Beta sustaining everything still comes from the positive drivers of U.S. regulation.

"If the bill on Bitcoin as a national reserve truly takes effect, the purchasing actions of the U.S. government will drive other regional governments and sovereign funds to adjust their allocations in sync, and Bitcoin could continue to rise," said Nachi.

Saved by "coin stock"

Compared to the bleak crypto market, the current DAT track seems particularly lively. This new wave not only catches attention but also appears to provide a "escape" outlet for capital trapped in the crypto world. "Now, all the crypto projects ranked in the top 100 by market cap are considering doing DAT," an investor told Dongcha Beating.

At the end of 2024 and the beginning of 2025, it is a critical juncture for most crypto VC funds as they are set to expire and begin a new round of fundraising. However, poor DPI data has deterred many LPs. Since the beginning of the year, many crypto funds have successively shut down.

Since 2022, the valuation of the primary market in the crypto field has been continuously expanding, with many projects able to raise tens of millions of dollars in the seed round stage, but there are very few with actual innovation and implementation scenarios. With the development of cryptocurrency ETFs and the FinTech+Crypto sector, VC has become the last choice for LPs to allocate crypto assets.

On the other hand, the continuously shrinking market liquidity is also increasing the difficulty for projects to exit. Retail investors are no longer willing to pay for "VC coin," and at the same time, projects still need to pay high listing costs for "going public." "Currently, major trading platforms generally require at least 5% of the token quota, which, based on a market value of 100 million USD, amounts to a cost of 5 million USD. Acquiring a shell company in the US stock market is about the same price."

However, the open regulatory environment in the United States has given everyone new hope. Crypto Assets reserve companies not only found the best exit channels for tokens but also provided new storylines to attract institutional funds to the crypto world.

In addition to crypto world VCs, midstream investment banks have also become beneficiaries of this trend. According to Bloomberg, DAT trading occupies 80% of many midstream investment banks' brokers' working time, and it is expected that business in this field will grow by 300% by the end of the year.

Now, the industry is eager to move the $2 trillion Crypto Assets market into the US stock market. In less than two months, dozens of DAT companies have emerged in the market.

According to Pantera's vision, the DAT sector will undergo significant consolidation within three to five years. When the downward trend arrives, small DAT companies that cannot achieve economies of scale will fall into a negative premium predicament and be acquired by larger competitors at extremely low prices. "DAT is a 'new financial asset model experimental field', not a center for technological innovation. In the end, only two to three companies will survive."

However, it seems that the music has just begun, and Cosmo believes that it will take at least another 6 months for the competition to heat up. "Ultimately, who will win is completely uncertain; all we can do is support those teams that we believe have the potential to become one of the 'two or three' in the future."