Blockchain Concept Stocks: The Bridge Between Traditional and Encryption Finance

As the global financial regulatory environment gradually becomes clearer, the cryptocurrency market is transitioning from a niche circle to the mainstream financial system. The recent results of the U.S. elections have had a positive impact on the cryptocurrency industry, promising to adopt more friendly regulatory policies, which has boosted market confidence. Against this backdrop, several Blockchain concept stocks have shown a general rise.

Currently, more and more listed companies have realized the immense potential of Blockchain technology and are incorporating 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 promoting the digital transformation and value creation of their business 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 a deep integration of cryptocurrency with traditional capital markets. Data shows that the asset management scale of BlackRock's Bitcoin spot ETF has reached $17.243 billion, and it has been almost consistently in a net inflow state since the beginning of the year. Meanwhile, Grayscale's Bitcoin spot ETF has an asset management scale of $13.659 billion, demonstrating investors' interest and confidence in this emerging asset class.

The current total market value of the 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 encryption market, its current market value is approximately $1.9 trillion, accounting for over 50% of the total cryptocurrency market value. It is not only a value storage tool recognized by both traditional finance and the native coin circle, but also due to its anti-inflation characteristics and limited supply, it has become the preferred choice for institutional investors, being hailed as "digital gold." Bitcoin plays a key hub role in the encryption market, stabilizing the market while 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 has a wide variety of assets and high volatility, with market performance driven by technological updates and user demand. The current market value is approximately $1.4 trillion, significantly lower than the high growth expected by the market.

3. The combination of traditional assets and encryption technology: This field covers emerging projects such as the tokenization of real-world assets on-chain (RWA) and blockchain-based securitized assets. Currently, its market value is only a few hundred billion dollars, but with the popularization of blockchain technology and the deep integration of traditional finance, this field is rapidly developing. By tokenizing traditional assets, liquidity is enhanced, which is also one of the main driving forces for the growth of the future crypto market. This part will promote the transformation of traditional finance towards a more efficient and transparent digital direction, unleashing huge market potential.

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 completed the transition from old powers to new funds.

In 2024, the position of cryptocurrency in the traditional financial sector is further consolidated. Financial giants, including BlackRock and Grayscale, have launched exchange-traded products for Bitcoin and Ethereum, providing both 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 tokenization trend of real-world assets ( RWA ) is also accelerating, further enhancing the liquidity and coverage of financial markets. For example, Germany's state-owned 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, utilizing tokenization to provide capital support for its new manufacturing facility in India. This also demonstrates that traditional financial institutions are leveraging Blockchain technology to optimize operational efficiency, and many financial institutions have already incorporated encryption technology into their business models.

Nowadays, a capital circulation model centered around 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 dollar liquidity and unfolding comprehensively.

The combination of traditional finance and Blockchain will create 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.

From these perspectives, it can be seen that the future development of the encryption market is not just the incremental growth of digital currencies themselves, but the enormous potential for integration with traditional finance. From regulatory benefits to changes in market structure, Blockchain concept stocks are at a critical juncture in this major trend, becoming the focus of global investors.

Blockchain Concept Stock Classification

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 firm MetaPlanet and the Hong Kong-listed company Boyaa Interactive have also joined in, with the acquisition of Bitcoin continuously increasing. MetaPlanet announced the introduction of the key performance indicator "Bitcoin Yield" (BTC Yield), with a third-quarter BTC Yield of 41.7%, and the fourth quarter ( reached 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 to provide investors with a new perspective for evaluating 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, disregarding Bitcoin price fluctuations, aiming to help investors better understand the company's actions of purchasing Bitcoin 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, MicroStrategy'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 MicroStrategy's significant achievements in Bitcoin investment, the company's debt structure has still attracted market attention. Reports indicate that MicroStrategy currently has a total outstanding debt of $4.25 billion. During this period, the company has raised funds through multiple rounds of issuing convertible bonds, some of which also come with interest payments. Market analysts are concerned that if the price of Bitcoin were to drop significantly, MicroStrategy might need to sell some of its Bitcoins to repay its debts. However, there are also views 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 debt interest, and therefore even if the price of Bitcoin plummets, it is unlikely to force the company to sell its Bitcoin assets. Furthermore, MicroStrategy's stock market value currently stands at $43 billion, and the proportion of debt in its capital structure is relatively small, which further reduces liquidation risk.

Despite many investors being optimistic about the company's firm Bitcoin investment strategy, believing it will bring substantial returns to shareholders, there are also some investors who express concerns about its high leverage and potential market risks. Due to the extreme volatility of the cryptocurrency market, any adverse market changes could have a significant impact on the asset value of such companies, and their stock prices have a significant premium relative to their net asset value, raising questions about whether this status can be sustained. If the stock price experiences a pullback, 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 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 and bond financing. 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, acquiring 27,200 Bitcoins at an average price of $74,463. The average holding price of these Bitcoins is $39,266, while the current Bitcoin price has reached approximately $90,000, resulting in a paper profit for MicroStrategy of nearly 2.5 times.

Despite facing a paper loss of about $1 billion on its Bitcoin investments during the bear market of 2022, MicroStrategy has never sold its Bitcoins and instead chose to continue increasing its holdings. 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 Bitcoins. Although this model brings high returns, it also carries certain risks, particularly during periods of severe Bitcoin price fluctuations. According to analysts, Bitcoin's price would need to drop below $15,000 for the company to face liquidation risks, and given that the current Bitcoin price is close to $90,000, this risk is minimal. Additionally, the company's leverage is low, and there is strong demand in the bond market, 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, it is important to be cautious of the medium to long-term risks posed by debt expansion. In the next 1 to 2 years, MicroStrategy's investment value 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-reward 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, increasing its total holdings to 1,058 Bitcoins, with a total investment amounting to approximately $71 million. Some 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 realized 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 financial hedging amid 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 regard it as a "mini-MicroStrategy."

3. Boya Interactive

Boyaa Interactive is a listed company primarily engaged in gaming, ranking among the top developers and operators in China's board game industry. Since the second half of last year, it has begun exploring the cryptocurrency market, aiming for a full transformation into a Web3 listed company. The company has made large-scale purchases of cryptocurrency assets such as Bitcoin and Ethereum, and invested in multiple Web3 ecological projects. Additionally, it has signed a subscription agreement with Pacific Waterdrop Digital Asset Fund under Waterdrop Capital to conduct strategic cooperation in Web3 game development and the Bitcoin ecological field. 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 integral part of our asset allocation strategy." As of the latest announcement, Boyaa Interactive holds 2,641 Bitcoins and 15,445 Ethereum, with total costs of approximately 1.