Author: Peggy Source: X, @peggybabel0

More and more listed companies are starting to "reserve cryptocurrencies".

They are no longer just buying BTC or ETH, but following MicroStrategy's example, building a complete set of replicable treasury models: through traditional financial instruments such as PIPE, SPAC, ATM, and Convertible Bonds, large-scale financing, building positions, and creating momentum, and then adding the new narrative of "on-chain treasury" to include cryptocurrencies such as Bitcoin, Ethereum, and SOL in the company's core balance sheet.

This is not only a change in asset allocation strategy, but also a new type of "financial engineering": a market experiment driven by capital, narrative, and regulatory gaps. UTXO Management, Sora Ventures, Consensys, Galaxy, Pantera and other institutions have entered the market one after another, pushing several marginal listed companies to complete their "transformation" and become "crypto reserve stocks" in the US or Hong Kong stock markets.

But this seemingly innovative capital feast is also arousing the vigilance of old-school financial people. On July 18, Jim Chanos, a well-known short seller on Wall Street, warned that today's "Bitcoin Treasury Fever" is repeating the 2021 SPAC bubble-companies rely on issuing convertible bonds and preferred stocks to buy coins, but there is no actual business support. "There are hundreds of millions of announcements every day, exactly the same as the madness of the year," he said.

This article sorts out the four key tools and representative cases behind this wave of trends, trying to answer a question: When traditional financial instruments meet encrypted assets, how can a company evolve from "buying coins" to "making a game"? And how should retail investors identify risk signals in this capital game?

How do financing tools build a "coin-buying company"?

PIPE: Institutions enter at a discount, and retail investors take over at high prices

PIPE (Private Investment in Public Equity) refers to the issuance of stocks or convertible bonds by listed companies to specific institutional investors at a discount price to achieve rapid financing. Compared with traditional public offerings, PIPE does not need to go through a cumbersome review process and can complete capital injection in a short period of time. Therefore, it is often regarded as a "strategic blood transfusion" tool during periods of tight financing windows or market uncertainty.

In the trend of encrypted treasuries, PIPE has been given another function: creating a signal of "institutional entry", driving stock prices up rapidly, and providing "market certification" for project narratives. Many listed companies that were not originally related to cryptocurrencies introduced funds through PIPE, purchased large amounts of BTC, ETH or SOL, and quickly reshaped themselves into a new identity of "strategic reserve companies". For example, after SharpLink Gaming (SBET) announced that it would establish an ETH treasury with $425 million in PIPE financing, its stock price soared more than tenfold in a short period of time.

But the impact of PIPE is far more than just superficial benefits. In terms of structural design, PIPE investors usually have better entry prices, unlocking arrangements and liquidity channels. Once a company submits an S-3 registration statement, the relevant shares can be listed and circulated, and institutional investors can choose to cash out. Although S-3 is essentially a technical operation and does not directly mean that a sell-off has occurred, in a highly emotional market, this action is often misinterpreted as "institutions begin to cash out", triggering market panic.

SharpLink's experience is a typical case: on June 12, 2025, the company submitted an S-3 registration statement to allow PIPE shares to be listed for resale. Although Chairman and Ethereum co-founder Joseph Lubin publicly clarified that "this is the standard PIPE follow-up process in tradfi" and stated that he and Consensys did not sell any shares, market sentiment is difficult to recover. The stock price fell by 54.4% in the following five trading days, becoming a textbook interpretation of the structural risks of the PIPE model. Although the stock price rebounded later, the sharp fluctuations of "surge and then plunge" reflected the structural faults in the PIPE process.

In addition, BitMine Immersion Technologies (BMNR) also staged a "surge and plunge" script after announcing the PIPE structure. After announcing a $2 billion PIPE financing for the construction of the Ethereum treasury, the stock price soared and then collapsed, falling 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 the market at a discount and enjoy a reserved exit mechanism; while ordinary investors often only enter the market in positive narratives such as "successful financing" and "currency-based treasury", and passively bear risks before the lifting of the ban and selling pressure. In the traditional financial market, this "pull up first, then harvest" structure has long been controversial, and in the crypto field where supervision is still imperfect and speculation is more intense, this structural imbalance is further amplified, becoming another risk of the capital narrative driving the market.

SPAC: Put valuations in press releases, not financial reports

SPAC (Special Purpose Acquisition Company) was originally a tool used for backdoor listing in traditional markets: a group of sponsors first set up a shell company, raised funds through IPO, and then found and acquired an unlisted company within a specified time, so that the latter bypassed the conventional IPO process and achieved "quick listing".

In the crypto market, SPAC has been given a new purpose: to provide a financial container for "strategic reserve" companies, to securitize their digital asset treasuries such as Bitcoin and Ethereum, and to incorporate them into the exchange system, so as to achieve two-way convenience of financing and liquidity.

Such companies often do not have clear business paths, product models or sources of income. Their core strategy is to first purchase crypto assets through PIPE financing, build a "currency-based" balance sheet, and then use SPAC mergers to enter the public market to package investors with an investment narrative of "holding currency means growth."

Typical representatives include Twenty One Capital, ProCap, and ReserveOne. Most of these projects revolve around a simple model: raise funds to purchase Bitcoin and put Bitcoin into a stock code. For example, Twenty One Capital holds more than 30,000 Bitcoins, merged with a SPAC backed by Cantor Fitzgerald, and raised $585 million through PIPE and convertible bond financing, part of which was used for on-chain income strategies and Bitcoin financial product development. ProCap is supported by Pompliano and develops lending and staking businesses around Bitcoin treasury. ReserveOne is more diversified, holding assets such as BTC, ETH, SOL, and participating in institutional-level staking and over-the-counter lending.

In addition, such companies are usually not satisfied with "hoarding coins for appreciation". They often further issue convertible bonds and issue new shares to raise more funds to buy more Bitcoin, forming a "structural leverage model" similar to MicroStrategy. As long as the price of the currency rises, the company's valuation can be over-inflated.

The biggest advantage of the SPAC model is time and control. Compared with the 12-18 months required for a traditional IPO, a SPAC merger can theoretically be completed in 4-6 months, and the narrative space is more flexible. Founders can tell future stories, lead valuation negotiations, and retain more equity without disclosing existing revenue. Although such crypto projects often face longer regulatory review cycles in reality (such as Circle's final abandonment of SPAC and switching to IPO), the SPAC path is still popular, especially for "currency-based companies" that have not yet established revenue capabilities. It provides a shortcut to bypass products, users, and financial foundations.

More importantly, the "listed company" identity brought by SPAC has natural legitimacy in investors' cognition. Stock codes can be included in ETFs, traded by hedge funds, and listed on Robinhood. Even if the underlying is digital currency, the outer packaging conforms to the language system of traditional finance.

At the same time, such structures often carry strong "signal value": once a large PIPE financing is announced, or cooperation with a well-known financial institution is reached, retail investor sentiment can be quickly activated. Twenty One Capital has attracted market attention precisely because it is backed by Tether, Cantor, SoftBank and other parties, even though the company's actual operations have not yet begun.

However, SPACs do not only bring convenience and halo, but also significant structural risks.

Business Idleness and Narrative Overdraft:Many companies merged by SPACs lack stable revenue, and their valuations are highly dependent on whether the "Bitcoin Strategy" can continue to attract attention. Once market sentiment reverses or regulation tightens, stock prices will fall rapidly.

Unequal Institutional Priority Structure:Sponsors and PIPE investors usually enjoy privileges such as enhanced voting rights, early lifting of restrictions, and pricing advantages. Ordinary investors are at a double disadvantage in terms of information and rights, and their equity is severely diluted.

Compliance operation and information disclosure challenges:After completing the merger and acquisition, the company needs to assume the obligations of a listed company, such as auditing, compliance, risk disclosure, etc., especially in the context of the incomplete digital asset accounting rules, which is prone to financial report confusion and audit risks.

Valuation bubble and redemption mechanism pressure:SPACs are often overvalued due to narrative expectations in the early stages of listing, and if retail investors redeem on a large scale when sentiment reverses, it will lead to tight cash flow, expected financing failure, and even trigger secondary bankruptcy risks.

The more fundamental problem is that SPACs are financial structures, not value creation. It is essentially a "narrative container": the vision of Bitcoin's future, the signal of institutional endorsement, and the plan of capital leverage are packaged into a tradable stock code. When Bitcoin rises, it looks sexier than ETFs; but when the market reverses, its complex structure and fragile governance will be exposed more thoroughly.

Related reading: "2024 Crypto IPO Boom: SPAC Replaces Traditional Backdoor Listing, Bitcoin Companies Sprint Collectively"

ATM: Printing Money at Any Time, the More You Fall, the More You Make

ATM (At-the-Market Offering, or "market price additional issuance") was originally a flexible financing tool that allows listed companies to sell stocks to the open market in stages and raise funds in real time based on market prices. In the traditional capital market, it is mostly used to hedge operational risks or supplement cash flow. In the crypto market, ATM is given another layer of function: it becomes a "self-service financing channel" for strategic reserve companies to increase their Bitcoin positions at any time and maintain liquidity.

The typical approach is that the company first builds a Bitcoin treasury narrative, and then launches an ATM program, without the need for clear pricing and time windows, to continue selling shares to the market in exchange for cash to buy more Bitcoin. It does not require the participation of specific investors like PIPE, nor does it need to disclose complex processes like IPOs, so it is more suitable for asset-addition companies with flexible pace and narrative-driven.

For example, LQWD Technologies, a Canadian listed company, announced the launch of an ATM program in July 2025, allowing it to sell up to 10 million Canadian dollars of common shares to the market from time to time. In the official statement, the ATM program "enhances the company's Bitcoin reserve capacity and supports the expansion of its global lightning network infrastructure", clearly conveying its growth path with Bitcoin as its core asset. Another example is BitFuFu, a Bitcoin mining company, which signed an ATM agreement with several underwriting institutions in June, planning to raise up to US$150 million through this mechanism, and has officially filed it with the SEC. Its official documents point out that this will help companies raise funds based on market dynamics without setting financing windows or trigger conditions in advance.

Related reading: "LQWD, a listed company, launches ATM plan to quickly increase its holdings of Bitcoin" "BitFuFu plans to launch $150 million ATM financing"

However, the flexibility of ATM also means higher uncertainty. Although the company needs to submit a registration statement (usually Form S-3) to the SEC to explain the scale and plan of the issuance, and accept the dual supervision of the SEC and FINRA, the issuance can be carried out at any time without disclosing the specific price and time in advance. This "no warning" additional issuance mechanism is particularly sensitive when the stock price goes down, and it is very easy to trigger a "falling more and more" dilution cycle, which will weaken market confidence and damage shareholder rights. Due to the high degree of information asymmetry, retail investors are more likely to passively bear risks in this process.

In addition, ATM is not suitable for all companies. If the company does not have the status of a "well-known seasoned issuer" (well-known seasoned issuer, WKSI), it must also comply with the "one-third rule", that is, the funds raised through ATM within 12 months shall not exceed one-third of the market value of its public float. All transactions during the issuance process must be completed through regulated brokers, and the company must also disclose the progress of fundraising and the use of funds in financial reports or through 8-K documents.

In general, ATM is a means of concentrating financing power: companies do not need to rely on banks or raise funds externally, they can raise cash to increase their positions in Bitcoin and Ethereum by "pressing a button". For the founding team, this is an extremely attractive path; but for investors, it may mean passive dilution without warning. Therefore, behind "flexibility" is a long-term test of governance capabilities, transparency and market trust.

Convertible Bond: Financing + Arbitrage "Two-handed Grasp"

Convertible Bond is a financing tool that combines debt and equity attributes, allowing investors to enjoy bond interest while retaining the right to convert bonds into company stocks, with a dual income path of "fixed income protection" and "equity potential". In the crypto industry, this tool is widely used for strategic financing, especially for companies that want to raise funds to "add Bitcoin" without immediately diluting equity.

Its appeal lies in: for companies, convertible bonds can complete large-scale financing at a lower coupon (even zero); for institutional investors, they have obtained an arbitrage opportunity of "downward capital protection and upward stock price increase". Many mining companies, stablecoin platforms, and on-chain infrastructure projects have introduced strategic funds through convertible bonds. But this also lays the groundwork for dilution risk: once the stock price reaches the conversion conditions, the bonds will be quickly converted into stocks, releasing large-scale selling pressure and causing a sudden impact on the market.

MicroStrategy is a typical case of using convertible bonds for "strategic reserve-type positions". Since 2020, the company has issued two convertible bonds, raising a total of US$1.7 billion, all of which were used to purchase Bitcoin. Its first bond issued in December 2020 was a 5-year bond with a coupon of only 0.75% and a conversion price of US$398 (a premium of 37%); the second bond in February 2021 was even 0% interest, 6 years, and a conversion price of US$1,432 (a premium of 50%), and still received an oversubscription of US$1.05 billion. MicroStrategy leveraged its holdings of more than 90,000 bitcoins at a very low cost of capital, achieving super-increases in bitcoin holdings at almost zero leverage cost, and its CEO Michael Saylor was therefore called "the biggest gambler in the crypto world."

However, this model is not without cost. MicroStrategy's financial leverage has far exceeded traditional corporate standards, and once the price of Bitcoin falls sharply, the company's net assets may turn negative. As shown in the IDEG report, when BTC falls below $17,500, MicroStrategy will be insolvent on its books. In addition, since its convertible bonds are in the form of private placements, some mandatory redemption and conversion terms have not been disclosed, which has also exacerbated the market's uncertainty about the future dilution rhythm.

Related reading "Uncovering the number one "gambler" in the crypto world: Is MicroStrategy's convertible bond strategy reliable? 》

In general, convertible bonds are a double-edged sword: they provide companies with a high degree of freedom between "financing without dilution" and "strategic increase in holdings", but they may also trigger concentrated selling pressure at a certain moment. Especially under conditions of information asymmetry, ordinary investors often find it difficult to perceive the specific triggering point of the conversion clause, and become the ultimate dilution pressure bearer.

Epilogue: Structure is king over narrative

On July 18, Jim Chanos, a well-known short seller on Wall Street, compared this wave of "crypto treasury fever" to the SPAC craze in 2021 in a podcast program - at that time, $90 billion was raised in three months, but in the end, a collective collapse and bloodshed. He pointed out that the difference in this round is that companies purchase Bitcoin by issuing convertible bonds and preferred stocks, but there is no actual business support. "We see announcements of hundreds of millions of dollars almost every day," he said, "It's exactly the same as the SPAC craze back then."

Related reading: "Wall Street Big Short Warns: Corporate Bitcoin Treasury Boom Is Replaying SPAC-style Bubble Risk"

At the same time, a report from Unchained further pointed out that this type of "crypto treasury company" has serious structural risks. The report lists representative projects such as SATO, Metaplanet, and Core Scientific, pointing out that their real net asset value (mNAV) is far lower than the market valuation, coupled with unclear disclosure, insufficient treasury quality, and complex structure. Once market sentiment reverses, it is very likely to transform from "crypto reserve" to "financial nuclear bomb."

Related reading: These 4 crypto treasury companies are ready for a price crash

For ordinary investors, "company buying coins" is much more complicated than it seems. What you see are announcements, daily limits, narratives and numbers, but what really drives price fluctuations is often not the coin price itself, but the design of the capital structure.

PIPE determines who can enter the market at a discount and who is responsible for taking over; SPAC determines whether a company can bypass financial quality inspections and tell stories directly; ATM determines whether the company is still "selling while falling" when the stock price falls; convertible bonds determine when someone suddenly converts bonds into stocks and sells them in a concentrated manner.

In these structures, retail investors are often placed at the "last leg": there is no priority information and no liquidity guarantee. It seems to be an investment that is "optimistic about crypto", but in fact it carries multiple risks of leverage, liquidity and governance structure.

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

How the market value is inflated by the price of the coin, and how it is in turn released into selling pressure through the structure - the design of this process determines whether you are participating in growth or taking the fuse of the next round of plunge.