Altcoin MicroStrategy's Stock Prices Cut in Half: Who's Paying for This "Fake" Feast?

Jessy, Golden Finance

The "MicroStrategy" trend in altcoins began in May 2025. Companies imitating MicroStrategy, such as ETH, TRX, SOL, XRP, DOGE, and BNB, have sprung up like mushrooms. Unlike MicroStrategy's strategy of simply issuing convertible bonds to purchase Bitcoin, the underlying operation involves the stakeholders behind these altcoins purchasing a shell company on the US stock market and then announcing the purchase of a specific token as a reserve. This will result in a short-term surge in both stock and coin prices. However, after this brief surge, the MicroStrategy offerings for these altcoins have all experienced a decline. For example, the share price of Sharplink, the Ethereum version of MicroStrategy, reached a high of nearly $80 per share after the announcement, but now trades for less than $20. Bitmine, currently the largest Ethereum holding company, saw its share price peak at $135 on July 3rd, but currently trades for only $34 per share.

BNB's microstrategy CEA Industries, after reaching a high of $57 on July 28th, has now fallen back to $35.

Similar altcoin microstrategies raise capital through share issuance to boost their market capitalization and purchase the corresponding altcoins. This effectively dilutes common shareholders' equity to provide cash flow for token accumulation. With a flood of capital supporting the altcoin's price, the price continues to rise, giving large holders of the altcoin the opportunity to sell at a high point. However, retail investors who followed the trend often bought at the peak of the price, becoming the ultimate payers of this extravaganza.

Stock Price Surge and Subsequent Halving

Since May 2025, several companies associated with major altcoins have replicated the "MicroStrategy" model in the US stock market. Their common operating strategy is: first, they control a US-listed shell company, then announce the purchase of a certain token as a "strategic reserve." They then raise funds by pumping up the stock price, and use the funds to increase their holdings of tokens, attempting to establish a flywheel structure that aligns token price with company valuation. In reality, this is simply a game of skewing the balance of power, a common occurrence in the financial world. Sharplink Gaming (SBET), the Ethereum-based "MicroStrategy" company, saw its stock price soar to nearly $80 after announcing its ETH purchase, but now stands at less than $20. Bitmine, the largest holder of ETH, also saw its stock price peak at $135 in early July, but has now fallen back to $32. TRON went public through a reverse merger with a Nasdaq-listed company called SRM Entertainment. SRM Entertainment subsequently changed its name to Tron Inc. Its investment in SRM Entertainment involved $100 million worth of TRX tokens, which SRM Entertainment plans to store in its treasury, creating a "TRX reserve." Following the announcement, SRM Entertainment's stock price surged 533% on June 16th, from $1.45 to $9.19, reaching a high of $10.83 during the day. It currently remains relatively stable at around $9. Even DOGE has its own "micro-strategy": In July, Nasdaq-listed company Bit Origin announced it had raised $500 million in funding ($400 million in equity and $100 million in debt) to establish a DOGE treasury. Another publicly listed company, Thumzup Media, preceded Bit Origin in securing approval to establish a $250 million cryptocurrency treasury containing DOGE. Currently, the former's stock price has halved from its post-announcement high. Recently, the most popular micro-strategy is BNB. First, CEA Industries (VAPE) (in which YZi Labs has an investment) announced on July 28th that it would "conduct a $500 million private placement of public equity (PIPE)." The PIPE consists of $400 million in cash and $100 million in cryptocurrency, in addition to proceeds from the exercise of warrants up to $750 million. The company will use these funds to establish a BNB Chain (BNB) cryptocurrency treasury." Following the announcement, the stock price soared from $8.9 to $57 that day, before a sharp correction to around $40 the following day. It currently trades at $35. Another example is Chinese microchip company Nano Labs (NA), which announced at the end of June that it would purchase $1 billion in BNB through the issuance of $500 million in convertible bonds, intending to hold 5–10% of the circulating supply over the long term. Following the announcement, the stock price briefly doubled to around $15, but has now fallen to around $6. Who is paying for the altcoin MicroStrategy's coin hoarding strategy? On the surface, these altcoin projects appear to be copying MicroStrategy's operating logic, using cryptocurrency as a reserve to demonstrate their belief in the long-term value of blockchain. However, in reality, this is a disguised capital game. Its core isn't value creation, but rather the artificial tying of coin prices to stock prices, creating a fleeting illusion of market capitalization through rounds of additional issuance. The logic is clear: the project owner or controlling shareholder manipulates a listed company to announce its holdings, stoking speculation in both the cryptocurrency and US stock markets and driving up stock prices. They then raise funds through a private placement (ATM, PIPE, convertible bonds, etc.) to repurchase the associated tokens. The key to this operation lies in pacing: rising coin prices drive stock prices, rising stock prices create financing opportunities, and completed financing drives coin prices, perpetuating the flywheel. The problem is that all of this is built on sentiment and valuations, lacking intrinsic value. The tokens themselves don't generate cash flow, and companies can't profit steadily from holding them. The financing generated by additional issuances effectively dilutes common shareholders' equity in exchange for short-term liquidity, achieving a "share-for-coin" exchange. When enthusiasm fades, the price of the token stops rising, or financing becomes limited, this structure quickly collapses. The token price begins to decouple from the stock price, the financing window closes, and companies can no longer maintain their token holdings and support. Altcoins lose their primary buyer, and the market capitalization bubble bursts. Meanwhile, investors who bought company shares at the peak become the ultimate bears of this false prosperity. The danger of this model lies in transferring the risk of crypto assets to the stock market, creating a cross-market Ponzi scheme: sentiment drives stock prices, which drive financing, which drives token purchases, driving up the price. Once this chain breaks, the collapse is even more swift. First, if the token price falls below the company's average investment cost, the company's balance sheet will deteriorate rapidly. Furthermore, this current practice exploits a loophole in lagging regulation. Once regulators halt this financing-based token purchase model, both the stock price and the token price will undoubtedly suffer a devastating blow. What's more foreseeable is that when sentiment surges and capital withdraws, prices will fall. It won't be a Luna-like spiral to zero, but rather a difficult time for the stock price to return to its highs. By then, the flywheel will stop turning, leaving behind only a shattered market capitalization and a bunch of ignorant investors who got on board at a high price.