Not every company can be MicroStrategy: Looking at the big dump of Sharplink by 70% to see what risks encryption reserve companies have.

The American gaming company Sharplink Gaming announced plans to invest $1 billion to establish an Ethereum vault, but its stock price fell by more than 70% due to an SEC filing. Although executives rushed to clarify market misunderstandings, this incident seems to highlight a deeper issue: "When encryption asset reserves combine with traditional stock market investors, does it instead amplify psychological and narrative discrepancies, laying the groundwork for market instability?"

From soaring hotspots to flash crash crises: The prelude to Sharplink's big dump

Sharplink Gaming once saw its stock price surge more than 20 times at the end of May after announcing the establishment of an Ethereum treasury, becoming the center of attention. The company raised $425 million from institutions including Consensys, Galaxy Digital, and Pantera Capital through a PIPE investment model with the listed company (.

)SharpLink announced a billion-dollar Ethereum reserve plan, and SBET's stock price skyrocketed after multiple circuit breakers(

Last week, the company also announced a plan to purchase up to 1 billion USD of ETH, further deepening its Ethereum reserve strategy.

However, just two weeks later, Sharplink submitted Form S-3 to the SEC yesterday, registering over 58.7 million shares for potential future resale, which the market interpreted as "an impending large sell-off," triggering panic selling pressure. After hours, the stock price once plummeted below $8, with an intraday maximum drop of over 73%.

Lubin clarifies that there is no actual stock sale, yet it is still difficult to stop the collapse of market trust.

Joseph Lubin, the chairman of Sharplink and CEO of Consensys, immediately posted on X to clarify and debunk rumors, emphasizing that neither Consensys nor he himself has sold any shares:

Some are misinterpreting SBET’s S-3 filing:

It registers shares for potential resale by prior investors

The “Shares Owned After the Offering” column is hypothetical, assuming full sale of registered shares.

This is standard post-PIPE procedure in tradfi, not an indication of…

— Joseph Lubin )@ethereumJoseph( June 12, 2025

This S-3 document outlines the standard process for PIPE financing in traditional finance, which is only for registering potential future resale rights and is not an actual sale.

It is not hard to see that such an explanation is clearly inadequate for the market. After all, for most investors, even if they trust the management, they may choose to sell first when any bad news arises, directly leading to a sell-off stampede.

Can traditional financial investors really withstand the volatility of encryption assets?

Although the asset allocation logic of ETH as the treasury of the team is basically common in the encryption field, for listed companies like Sharplink, their investors mostly come from traditional markets and may lack the psychological preparation to face the volatility of crypto assets.

This is precisely the core contradiction of this type of "Bitcoin Acquisition Vehicles )Bitcoin Acquisition Vehicles(" model: "Investors in stocks tend to look for predictable revenue growth and stable cash flow, but cryptocurrency assets bring unpredictable volatility and narrative changes."

) Bitcoin reserve strategy companies are heating up: how large-scale buying pushes up coin prices and becomes a market time bomb? (

In other words, when there is any sign of trouble with the investment target, these investors may become the first to jump ship.

Sygnum: Transforming encryption without narrative support is just risk transfer.

Sharplink is not the only publicly traded company exploring encryption asset reserves. From MicroStrategy )Strategy( to Tesla, GameStop, and even Trump Media, all are packaging the encryption asset narrative with stocks. However, the key to success or failure behind this lies in whether the company has the ability to control the narrative.

Taking MicroStrategy as an example, its success partly comes from Michael Saylor himself being a strong advocate for the BTC narrative. However, if other companies lack similar leaders, have an investor structure that does not match expectations, and their main business is not profitable, the risks after the hype will be magnified several times.

)CZ Talks about Bitcoin reserve companies: Not taking risks is the biggest risk! (

As the author pointed out in a previous report: "When investors do not know whether they are buying technology stocks, financial stocks, or encryption investment funds, such confusion itself is a risk."

Rethinking "crypto reserves": Not every company can take the path of MicroStrategy.

Sharplink's event reminds the market that encryption reserve companies are not a panacea for solving corporate financial difficulties: "Instead of letting stock companies bear the volatility of encryption, it is better to focus on transformation of the main business or return to the native encryption."

If more companies attempt to replicate this "cryptocurrency as a hype narrative" model in the future, investors will need to apply a higher risk assessment standard to these companies to avoid traditional finance becoming a replica of cryptocurrency volatility.

This article is not every company can be like MicroStrategy: From the big dump of Sharplink by seventy percent, what risks do encryption reserve companies have? Originally appeared in Chain News ABMedia.