Global Blockchain Concept Stock Market Analysis: New Heights of Liquidity

As the global financial regulatory environment becomes increasingly clear, the cryptocurrency market is gradually integrating into the mainstream financial system. Recently, the results of the US elections have had a positive impact on the crypto industry, boosting market confidence. Against this backdrop, multiple Blockchain concept stocks have generally risen.

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

In recent years, especially with the regulatory dividends brought by the introduction of cryptocurrency-related ETFs in the United States, it marks the deep integration of cryptocurrencies 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 certain company's Bitcoin spot ETF has reached $17.243 billion, and it has almost been in a state of net inflow since the beginning of the year.

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 cryptocurrency 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 cryptocurrency community, but also due to its anti-inflation characteristics and limited supply, it has become the preferred choice for institutional investors, being referred to as "digital gold."

2. Native on-chain assets: including public chain tokens, decentralized finance ( DeFi ) related tokens, as well as functional tokens in on-chain applications, etc. This field is diverse and highly volatile, with its 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 expected high growth.

3. The combination of traditional assets and crypto 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 proliferation of blockchain technology and the deep integration of traditional finance, this field is rapidly developing. By tokenizing traditional assets and enhancing liquidity, it is also one of the main driving forces for growth in the future crypto market.

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 capital.

In 2024, the position of cryptocurrencies in the traditional financial sector will be further consolidated. This includes certain financial giants launching exchange-traded products for Bitcoin and Ethereum, providing institutional and retail investors with more convenient channels for investing in digital assets, 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 reach of financial markets. For example, the German state development bank issued two digital bonds totaling 150 million euros in 2024 using Blockchain technology. These bonds are settled using Distributed Ledger Technology ( DLT ). A French computer equipment manufacturer issued corporate bonds, utilizing tokenization to provide capital support for its new manufacturing facilities in India, which also demonstrates that traditional financial institutions are leveraging Blockchain technology to optimize operational efficiency. Many financial institutions have already integrated crypto technology into their business models.

Today, a capital circulation model centered on Bitcoin as the core asset, utilizing ETFs and the stock market as the main channels for capital inflow, and leveraging listed companies as the carrying platform, is continuously absorbing USD Liquidity and expanding comprehensively.

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

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

The current blockchain concept stocks can be roughly divided into the following categories:

1. Asset-Driven Concept:

Regarding the concept of asset allocation in Blockchain stocks, the company's strategy is to use Bitcoin as the main reserve asset. This strategy was first implemented by a certain company in 2020 and quickly attracted market attention. This year, other companies such as Japanese investment firms and Hong Kong listed companies have also joined in, continuously increasing their acquisition of Bitcoin. A certain company 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 assessing the company's value and investment decisions. This indicator is based on the diluted number of outstanding shares and calculates the number of Bitcoins held per share, without considering the volatility of Bitcoin prices. It aims to help investors better understand the company's behavior of purchasing Bitcoins 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 company's Bitcoin investment yield has reached 41.8%, indicating that the company has successfully avoided excessive dilution of shareholder interests while continuously increasing its holdings.

However, despite a certain company's significant achievements in Bitcoin investment, the company's debt structure has still raised concerns in the market. Reports indicate that the company's total outstanding debt currently amounts to $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 the price of Bitcoin falls sharply, the company may need to sell some of its Bitcoins to repay its debts. However, there are also views suggesting 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 the interest on its debts; therefore, even if the price of Bitcoin crashes, it is unlikely to force the company to sell its Bitcoin assets. Furthermore, 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 the liquidation risk.

Despite many investors being optimistic about the company's firm Bitcoin investment strategy, believing it will bring substantial 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 their stock prices are trading at a significant premium relative to their net asset value, raising questions about the sustainability of this state. If there is a correction in stock prices, it could affect the company's financing ability, thereby impacting its future Bitcoin purchasing plans.

1. Microstrategy(MSTR)

Microstrategy was founded in 1989, initially focusing on the fields 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, evolving from an early Bitcoin skeptic to a staunch supporter of cryptocurrency.

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 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, with an average price of $74,463 for 27,200 Bitcoins. The average holding price of these Bitcoins is $39,266, while the current Bitcoin price has reached about $90,000, resulting in a paper profit for Microstrategy of nearly 2.5 times.

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 increasing its position. Since 2023, the strong rise in Bitcoin has significantly boosted Microstrategy's stock price, with a year-to-date return on investment reaching 26.4% and a cumulative return on investment exceeding 100%. Microstrategy's current business model can be seen as a "BTC-based cyclical leverage model," raising funds through bond issuance to purchase Bitcoin. While 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 face liquidation risks, and with Bitcoin's current price close to $90,000, this risk is minimal. Additionally, the company's leverage ratio is low, and the 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 holds significant potential. However, one must be cautious of the medium to long-term risks that may come with debt expansion. In the next 1 to 2 years, Microstrategy's investment value is still worth paying attention to, especially for investors optimistic about the Bitcoin market outlook; it 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 Bitcoins, with a total investment amount 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 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. Nevertheless, 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, providing a financial hedge for Semler amid economic fluctuations, despite a 17% year-over-year decline in revenue for that quarter.

Although Semler's current market capitalization 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 version of Microstrategy."

3. Boya Interactive

Boyaa Interactive is a publicly listed company primarily engaged in gaming, ranking among the top developers and operators in the Chinese board game industry. Since the second half of last year, it has started to explore the crypto market, aiming for a comprehensive transformation into a Web3 publicly listed company. The company has made significant purchases of cryptocurrencies such as Bitcoin and Ethereum, as well as investing in multiple Web3 ecosystem projects, and has signed subscription agreements with certain capital-affiliated funds 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's development and layout of Web3 business, and is also a crucial component of our group's asset allocation strategy." As of the latest announcement, Boyaa Interactive holds 2,641 Bitcoins and 15,445 Ethereums, with total costs of approximately $143 million and $42.578 million, respectively.

It is worth mentioning that due to the recent activity in the cryptocurrency market, both Bitcoin and cryptocurrencies have seen a significant rise. Based on the closing prices of cryptocurrencies on the 12th, Boyaa Interactive has an unrealized gain of nearly 90.22 million USD in Bitcoin; in Ethereum, Boyaa Interactive has an unrealized gain of about 7.95 million USD, totaling nearly 100 million USD in unrealized gains for both.

The continuous rise in cryptocurrency prices has sparked significant attention in the market towards related concept stocks. Taking a certain market as an example, as of November 12, some companies have increased by 41.18%, 27.40%, and 11.65% respectively, showcasing the Block