Global Encryption Concept Stock Analysis: New Liquidity Heights Outside the Crypto World

As the global financial regulatory environment becomes increasingly clear, the cryptocurrency market is gradually moving from a niche circle towards the mainstream financial system. Recent political changes have had a positive impact on the cryptocurrency industry, boosting market confidence. Against this backdrop, several blockchain concept stocks have generally risen.

At present, more and more publicly listed companies have recognized the tremendous potential of blockchain technology and have incorporated 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 in their businesses 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 that cryptocurrencies are no longer confined to a closed digital currency market but are deeply integrated with traditional capital markets. Data shows that the assets under management of mainstream Bitcoin spot ETFs have reached several billion dollars, demonstrating investors' interest and confidence in this emerging asset class.

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

1. Bitcoin ( BTC ): As the core asset of the entire crypto market, its current market capitalization 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 crypto world, but also due to its anti-inflation characteristics and limited supply, it has become the preferred choice for institutional investors, being dubbed "digital gold." Bitcoin plays a key role as a hub in the crypto market, stabilizing the market while also 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 is diverse and highly volatile, with market performance driven by technological updates and user demand. Currently, the market value is approximately $1.4 trillion, which is significantly lower than the market's high growth expectations.

3. The combination of traditional assets and encryption technology: This field encompasses on-chain real-world asset (RWA) tokenization, blockchain-based securitized assets, and other emerging projects. Currently, its market value is only a few hundred billion dollars, but with the popularization of blockchain technology and the deep integration with traditional finance, this area is rapidly developing. By tokenizing traditional assets, enhancing liquidity, it is also one of the main driving forces for growth in the future crypto market. This part will promote the transformation of traditional finance towards a more efficient and transparent digital direction and unleash 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 also completed the transition from old powers to new funding sources.

In 2024, the position of cryptocurrencies in the traditional financial sector is further consolidated. Several financial giants have launched exchange-traded products for Bitcoin and Ethereum, providing 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 trend of tokenization of real-world assets ( RWA ) is also accelerating, further enhancing the liquidity and coverage of financial markets. For example, the German 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 ). The French computer equipment manufacturer Metavisio issued corporate bonds to provide capital support for its new manufacturing facility in India through tokenization, which also demonstrates that traditional financial institutions are using blockchain technology to optimize operational efficiency. Many financial institutions have already integrated encryption 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 birth to more investment opportunities than native on-chain assets. Behind this trend is the market's emphasis on stability and practical application scenarios. The traditional financial market has a solid infrastructure and mature market mechanisms, and when combined with blockchain technology, it will unleash greater potential.

Through these perspectives, it can be seen that the future development of the encryption market is not just an increment of digital currencies themselves, but the enormous potential of 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.

Classification of Blockchain Concept Stocks

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 by MicroStrategy 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 volume of Bitcoin continuously increasing. MetaPlanet announced the introduction of the key performance indicator "Bitcoin Yield" set by MicroStrategy (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, the strategy of companies like MicroStrategy is to introduce the "Bitcoin Yield" key performance indicator, providing investors with a new perspective to evaluate the company's value and investment decisions. This indicator is based on the diluted number of shares outstanding and calculates the number of Bitcoins held per share, without considering Bitcoin price fluctuations. It aims to help investors better understand the company's actions in purchasing Bitcoins through the issuance of additional common shares or convertible instruments, focusing on measuring the balance between the growth of Bitcoin holdings and equity dilution. As of now, MicroStrategy's Bitcoin investment yield has reached 41.8%, indicating that the company has successfully increased its holdings while avoiding excessive dilution of shareholder interests.

However, despite MicroStrategy's significant achievements in Bitcoin investment, the company's debt structure has still raised market concerns. Reports indicate that MicroStrategy currently has a total outstanding debt of $4.25 billion. During this period, the company has financed through multiple rounds of issuing convertible bonds, some of which also come with interest payments. Market analysts are worried that if Bitcoin prices drop significantly, MicroStrategy may need to sell some Bitcoin to repay its debts. However, there are also viewpoints suggesting that, due to MicroStrategy's reliance on its stable traditional software business and the low interest rate environment, its operating cash flow is sufficient to cover the debt interest. Therefore, even if Bitcoin prices plummet, it is unlikely to force the company to sell its Bitcoin assets. Additionally, MicroStrategy's stock market value currently stands at $43 billion, with debt making up a small proportion of its capital structure, further reducing liquidation risk.

Despite many investors being optimistic about the company's firm Bitcoin investment strategy, believing it will bring considerable returns to shareholders, some investors are concerned about its high leverage and potential market risks. Due to the extreme volatility of the cryptocurrency market, any adverse market changes could significantly impact the asset value of such companies, and there is a notable premium on their stock prices relative to their net asset value, raising questions about the sustainability of this situation. If the stock price experiences a correction, it may affect the company's financing capabilities, thereby impacting its future Bitcoin purchasing plans.

1、Microstrategy(MSTR)

MicroStrategy 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 traded company to use Bitcoin ( BTC ) as a reserve asset, a strategy that fundamentally changed its business model and market position. Founder Michael Saylor played a key role in driving this transformation, shifting from an early Bitcoin skeptic to a staunch supporter of encryption.

Since 2020, MicroStrategy has continuously purchased Bitcoin through its own funds, bond financing, and other methods. As of now, the company has accumulated approximately 279,420 coins, with a current market value of nearly $23 billion, accounting for about 1% of the total Bitcoin supply. The most recent purchase occurred between October 31 and November 10, 2023, during which 27,200 coins were acquired at an average price of $74,463. The average holding price of these coins is $39,266, while the current Bitcoin price has reached about $90,000, resulting in a nearly 2.5 times paper gain for MicroStrategy.

Despite facing a paper loss of about $1 billion during the bear market in 2022, MicroStrategy has never sold its Bitcoin and instead chose to continue accumulating. Since 2023, the strong rise of Bitcoin has significantly boosted MicroStrategy's stock price, with a year-to-date return on investment of 26.4% and a cumulative return on investment exceeding 100%. MicroStrategy's current business model can be seen as a "BTC-based circular leverage model," financing the purchase of Bitcoin through bond issuance. Although this model brings high returns, it also carries certain risks, especially during periods of severe Bitcoin price fluctuations. According to analysis, Bitcoin's price would need to fall below $15,000 for the company to potentially face liquidation risks, and given that the current Bitcoin price is close to $90,000, this risk is very small. Additionally, the company's leverage ratio is low, and demand in the bond market is strong, further enhancing MicroStrategy's financial stability.

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

2、Semler Scientific(SMLR)

Semler Scientific is a company focused on medical technology, and one of its innovative strategies is to use Bitcoin as a primary reserve asset. In November 2024, the company disclosed that it had recently purchased 47 Bitcoins, raising its total holdings to 1,058 coins, with a total investment of approximately $71 million. Part of the funds for these acquisitions came from operating cash flow, indicating that Semler is attempting to strengthen its asset structure through its Bitcoin holdings, becoming a representative of innovation in asset management.

However, Semler's core business still focuses on its QuantaFlo device, which is primarily used for diagnosing cardiovascular diseases. However, Semler's Bitcoin strategy is not just a financial reserve; in the third quarter of 2024, the company achieved 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 Semler with a financial hedge against economic fluctuations.

Although Semler's current market value is only $345 million, far lower than MicroStrategy, its strategy of adopting Bitcoin as a reserve asset has led investors to view it as a "mini MicroStrategy."

3. Boya Interactive

Boyaa Interactive is a listed company whose main business is gaming. It is one of the leading developers and operators in China's chess and card game industry. Since the second half of last year, it has begun to explore the crypto 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 a subscription agreement with Pacific Waterdrop Digital Asset Fund under Waterdrop Capital for strategic cooperation in Web3 game development and the Bitcoin ecosystem. The company has stated: "Purchasing and holding cryptocurrencies is an important measure for our group to develop and layout Web3 business, and it is also an important part of our group's asset allocation strategy." As of the latest announcement, Boyaa Interactive holds 2,641 Bitcoins and 15,445 Ethereum, with total costs of approximately $143 million and $42.578 million, respectively.

It is worth mentioning that due to the recent activity in the crypto world, Bitcoin and other cryptocurrencies have experienced a significant surge. If we consider the cryptocurrency closing on the 12th,