Blockchain concept stocks welcome new development opportunities

As the global financial regulatory environment becomes increasingly clear, the cryptocurrency market is gradually moving towards the mainstream financial system. After the U.S. elections, Trump's election as president brought positive effects to the cryptocurrency industry, promising to adopt more favorable regulatory policies, including establishing a national Bitcoin reserve and encouraging the U.S. to expand Bitcoin mining activities. These commitments boosted market confidence. Against this backdrop, the capital markets began to show widespread transmission, with multiple Blockchain concept stocks experiencing a rally.

Currently, more and more publicly listed companies are recognizing the enormous potential of Blockchain technology and are actively incorporating it into their strategic layout. Many Blockchain concept stock companies are experiencing strong development momentum, gaining significant attention and investment in the market. These companies are driving digital transformation and value creation by introducing Blockchain technology, gradually becoming important players in the industry.

In recent years, especially with the regulatory benefits brought by the launch of cryptocurrency-related ETFs in the United States, it signifies the deep integration of cryptocurrency with traditional capital markets. A certain fund's Bitcoin trust has become a bridge for traditional investors to enter the crypto market. Data shows that the asset management scale of a Bitcoin spot ETF under a certain asset management company has reached 17.243 billion USD, and has almost been in a state of net inflow since the beginning of the year. Another company's Bitcoin spot ETF management asset scale is 13.659 billion USD, demonstrating investors' interest and confidence in this emerging asset class.

The current total market capitalization of the cryptocurrency market is approximately $3.2 trillion, which can be divided into the following three main parts:

1. Bitcoin ( BTC ): As the core asset of the entire crypto market, its current market value is approximately $1.9 trillion, accounting for over 50% of the total cryptocurrency market capitalization. It is not only recognized as a store of value by both traditional finance and the native coin circle but also, due to its anti-inflation characteristics and limited supply, has become the preferred choice for institutional investors, being dubbed the "digital gold." Bitcoin plays a key hub role in the crypto market, stabilizing the market while providing an interconnected bridge between traditional assets and native on-chain assets.

2. Native on-chain assets: including public chain tokens ( such as Ethereum ETH), decentralized finance ( DeFi) related tokens, as well as functional tokens in on-chain applications, etc. This field has a wide variety of assets and high volatility, with its market performance driven by technological updates and user demand. Currently, the market capitalization is about 1.4 trillion dollars, which is significantly lower than the high growth expected by the market.

3. The combination of traditional assets and cryptographic technology: This field encompasses emerging projects such as the tokenization of on-chain real-world assets (RWA) and blockchain-based securitized assets. Currently, its market value is only a few hundred billion dollars, but with the popularization of blockchain technology and the deep integration of traditional finance, this field is rapidly developing. By tokenizing traditional assets to enhance liquidity, it is also one of the main driving forces for future growth in the crypto market. This segment is full of potential and will drive traditional finance towards a more efficient and transparent digital transformation, releasing enormous market potential.

Why are we so optimistic about the growth potential of traditional assets?

In the past six months, the asset attributes of Bitcoin have undergone a new evolution, and the dominant force in the capital market has transitioned from the old powers to new funding sources.

In 2024, the position of cryptocurrency in the traditional financial sector is further consolidated. Several financial giants have launched exchange-traded products for Bitcoin and Ethereum, providing both institutional and retail investors with more convenient channels for digital asset investment, which further confirms the connection with traditional securities.

At the same time, the tokenization trend of real-world assets ( RWA ) is also accelerating, further enhancing the liquidity and coverage of financial markets. For instance, Germany's state development bank KfW issued two digital bonds totaling 150 million euros in 2024 using Blockchain technology. These bonds are settled through Distributed Ledger Technology ( DLT ), and the French computer equipment manufacturer Metavisio issued corporate bonds, utilizing tokenization to provide capital support for its new manufacturing facility in India. This also demonstrates that traditional financial institutions are leveraging Blockchain technology to optimize operational efficiency, and many financial institutions have integrated crypto technology into their business models.

Today, a capital circulation model centered around Bitcoin as the core asset, using ETFs and the stock market as the main channels for capital inflow, and leveraging listed companies as the carrying platform, is continuously absorbing dollar liquidity and fully unfolding.

The combination of traditional finance and Blockchain will give rise to more investment opportunities than native on-chain assets. Behind this trend is a reflection of the market's emphasis on stability and practical application scenarios. The traditional financial market has a solid infrastructure and mature market mechanisms, and after integrating with Blockchain technology, it will unleash greater potential.

From these perspectives, it can be seen that the future development of the cryptocurrency market is not just an increment of digital currencies themselves, but the enormous potential for integration with traditional finance. From regulatory dividends to changes in market structure, Blockchain concept stocks are at a critical juncture of this major trend, becoming the focus of global investors.

We roughly categorize the current blockchain concept stocks into the following types:

1. Asset-Driven Concept

Regarding the concept of asset allocation in blockchain stocks, the company's strategy is to use Bitcoin as the primary reserve asset. This strategy was first implemented in 2020 and quickly attracted market attention. This year, other companies such as the Japanese investment company MetaPlanet and the Hong Kong-listed company Boyaa Interactive have also joined in, with the acquisition of Bitcoin continuously increasing. MetaPlanet announced the introduction of the key performance indicator "Bitcoin Yield" ( BTC Yield ), with its third quarter BTC Yield at 41.7%, and the fourth quarter ( reaching as high as 116.4% as of October 25, ).

Specifically, some companies' strategy is to introduce "Bitcoin Yield" as a key performance indicator to provide investors with a new perspective for evaluating the company's value and investment decisions. This indicator is based on the diluted number of shares outstanding, calculating the amount of Bitcoin held per share without considering Bitcoin price fluctuations. It aims to help investors better understand the company's behavior of acquiring Bitcoin through the issuance of additional common stock or convertible instruments, focusing on measuring the balance between the growth of Bitcoin holdings and equity dilution. As of now, a certain company's Bitcoin investment yield has reached 41.8%, indicating that while the company continuously increases its holdings, it has successfully avoided excessive dilution of shareholder interests.

However, despite achieving significant results in Bitcoin investment, the company's debt structure has still attracted market attention. It is reported that the company's total outstanding debt currently amounts to $4.25 billion. During this period, the company has raised funds through multiple rounds of issuing convertible bonds, some of which also come with interest payments. Market analysts are concerned that if the price of Bitcoin falls sharply, the company may need to sell some Bitcoin to repay its debt. However, there are also views that, due to the company's reliance on its stable traditional software business and low-interest-rate environment, its operating cash flow is sufficient to cover debt interest, and therefore even if the price of Bitcoin plummets, it is unlikely to force the company to sell its Bitcoin assets. In addition, the company's stock market value currently reaches $43 billion, and the proportion of debt in its capital structure is relatively small, which further reduces liquidation risk.

Despite many investors being optimistic about the company’s steadfast Bitcoin investment strategy, believing it will bring substantial returns to shareholders, some investors are also concerned about its high leverage and potential market risks. Given the extreme volatility of the cryptocurrency market, any adverse market changes could significantly impact the asset value of such companies, and their stock price has a notable premium relative to their net asset value, raising questions about whether this state can be sustained. If the stock price experiences a correction, it may affect the company's financing capabilities, thereby impacting its future Bitcoin purchasing plans.

1. Business Intelligence Software Company

The company was founded in 1989, initially focusing on the field of business intelligence and enterprise solutions. However, starting in 2020, the company transformed into the world's first publicly listed enterprise to use Bitcoin (BTC) as a reserve asset, a strategy that completely changed its business model and market position. The founder played a key role in driving this transition, shifting from an early Bitcoin skeptic to a staunch supporter of cryptocurrency.

Since 2020, the company has been continuously purchasing Bitcoin through its own funds, bond financing, and other means. As of now, the company has accumulated approximately 279,420 Bitcoins, with a current market value close to $23 billion, accounting for about 1% of the total Bitcoin supply. The most recent purchase occurred between October 31 and November 10, 2023, acquiring 27,200 Bitcoins at an average price of $74,463. The average holding price of these Bitcoins is $39,266, while the current Bitcoin price has reached approximately $90,000, resulting in a book profit of nearly 2.5 times.

Despite facing a paper loss of approximately $1 billion on its Bitcoin investments during the bear market of 2022, the company has never sold any Bitcoin, but instead chose to continue increasing its position. Since 2023, the strong rise of Bitcoin has driven a significant increase in the company's stock price, with a year-to-date return on investment of 26.4% and a cumulative return on investment exceeding 100%. The company's current operating model can be seen as a "BTC-based cyclical leverage model," raising funds through bond issuance to purchase Bitcoin. Although this model brings high returns, it also carries certain risks, especially during periods of severe Bitcoin price fluctuations. According to analysis, the Bitcoin price would need to fall below $15,000 for the company to face liquidation risks, and given the current Bitcoin price is close to $90,000, this risk is very small. Additionally, the company's leverage ratio is low, and there is strong demand in the bond market, which further enhances the company's financial stability.

For investors, the company can be seen as a leveraged investment tool in the Bitcoin market. With expectations of a steady increase in Bitcoin prices, the company's stock has significant potential. However, caution is needed regarding the medium to long-term risks that could arise from debt expansion. In the next 1 to 2 years, the company's investment value is still worth paying attention to, especially for investors optimistic about the prospects of the Bitcoin market, as this is a high-risk, high-return asset.

2. Medical Technology Company

The company is a medical technology-focused firm, and one of its innovative strategies is to use Bitcoin as its primary reserve asset. In November 2024, the company disclosed that it had recently acquired 47 Bitcoins, raising its total holdings to 1,058 Bitcoins, with a total investment amounting to approximately $71 million. Part of the funding for these acquisitions comes from operating cash flow, indicating that the company is attempting to strengthen its asset structure through its Bitcoin holdings, positioning itself as a representative of innovation in asset management.

However, the company's core business still focuses on its QuantaFlo device, which is primarily used for diagnosing cardiovascular diseases. Nevertheless, the company's Bitcoin strategy is not just a financial reserve; in the third quarter of 2024, the company realized an unrealized gain of $1.1 million from its Bitcoin holdings. Despite a 17% year-on-year decline in revenue for that quarter, it still provided the company with a financial hedge against economic fluctuations.

Although the company's current market value is only $345 million, far lower than other similar companies, its strategy of adopting Bitcoin as a reserve asset has led investors to view it as a "miniature" Bitcoin reserve company.

3. Boya Interactive

Boyaa Interactive is a Hong Kong-listed company primarily engaged in gaming, ranking among the top developers and operators in China's board game industry. In the second half of last year, it began to explore the cryptocurrency market, aiming to fully transform into a Web3 listed company. The company has made large-scale purchases of cryptocurrencies such as Bitcoin and Ethereum, invested in multiple Web3 ecosystem projects, and signed subscription agreements with a digital asset fund under a certain capital for strategic cooperation in Web3 game development and the Bitcoin ecosystem. The company has stated: "Purchasing and holding cryptocurrencies is an important initiative for our group to develop and layout Web3 business, and it is also a key component of our group's asset allocation strategy." As of the latest announcement, Bo...