TL;DR
- Wall Street is experiencing a boom in SPACs and reverse mergers, where crypto companies buy digital assets and go public without launching a traditional IPO.
- Firms like Twenty One Capital, Tron, and DeFi Development Corp. raise funds to acquire Bitcoin, Ethereum, or Solana and capitalize on the premiums the market assigns to these vehicles.
- The model, inspired by Strategy, allows for fast-track listings but dilutes existing shareholders and faces risks if crypto prices fall and those extra valuations vanish.
Wall Street is going through a wave of financial deals where crypto companies take advantage of structures like SPACs and reverse mergers to get listed without going through the conventional initial public offering process.
Firms backed by private capital and digital sector entrepreneurs accumulate assets like Bitcoin, Ethereum, and Solana and inject them into already listed companies to capitalize on market momentum. The strategy involves raising funds through share issuances and convertible debt to purchase cryptocurrencies and benefit from the premiums investors assign to these publicly traded vehicles.
The Strategy Phenomenon
The trend mirrors the model of Strategy, a company that overhauled its original business and now holds over $120 billion in market capitalization, trading at a 90% premium over its net asset value. This case has become a benchmark for smaller companies seeking to replicate the formula by accelerating listing processes through shell companies or distressed firms.
Names like Twenty One Capital, ProCap Financial, Tron Inc., and DeFi Development Corp. are part of this new wave of crypto treasury companies debuting on public markets by buying digital assets. Some focus on Bitcoin, while others target Ethereum or Solana. The model also appeals to investment funds and mid-sized banks that see these deals as a fast way to secure fees in a market that had lost momentum after the 2022 SPAC crash.
What Happens if Crypto Prices Drop?
These structures allow companies to move quickly and take advantage of bull cycles but carry clear risks. Firms that fund crypto asset purchases through new share issuances dilute early shareholders and, unlike ETFs, must actively manage their reserves and operating capital. As more of these vehicles emerge, the premium investors are willing to pay over their book value decreases.
Analysts warn the real test will come when crypto prices retreat, and those premiums vanish. The model’s sustainability doesn’t rely on profiting from a bull market but on surviving corrections. Expanding into assets beyond Bitcoin offers more opportunities but also increases exposure to volatility
