The Capital Game Behind the Crypto Treasury Frenzy: How Can Retail Investors Avoid Being the Last to Hold the Bag?

Original Title: "In the Surge of Crypto Reserve Companies, What Are the Potential 'Small Pitfalls'?"

More and more listed companies are starting to 'reserve cryptocurrencies'.

They are no longer just buying BTC or ETH, but following the example of MicroStrategy, building a replicable treasury model: through traditional financial instruments such as PIPE, SPAC, ATM, Convertible Bond, etc., to raise funds, build positions, create momentum on a large scale, and then overlay the new narrative of 'on-chain treasury', incorporating cryptocurrencies like Bitcoin, Ethereum, SOL into the company's core balance sheet.

This is not only a change in asset allocation strategy but also a new type of 'financial engineering': a market experiment driven by capital, narrative, and regulatory gaps. Institutions such as UTXO Management, Sora Ventures, Consensys, Galaxy, Pantera have successively entered the field, promoting several marginal listed companies to complete their 'transformation', becoming 'crypto reserve-type stocks' in the US or Hong Kong stock markets.

But this seemingly innovative capital feast is also raising alarms among traditional financiers. On July 18, the famous Wall Street short-seller Jim Chanos warned that the current 'Bitcoin treasury fever' is replaying the 2021 SPAC bubble—companies are buying cryptocurrencies by issuing convertible bonds and preferred shares without actual business support. 'Every day there are announcements worth hundreds of millions, exactly like the madness back then,' he said.

This article sorts out the four key tools and representative cases behind this wave, trying to answer a question: When traditional financial instruments meet crypto assets, how does a company evolve from 'buying coins' to 'setting up a game'? And how can retail investors identify the risk signals in this capital game?

PIPE: Institutions Enter at a Discount, Retail Investors Take Over at High Prices

PIPE (Private Investment in Public Equity) refers to listed companies issuing stocks or convertible bonds to specific institutional investors at a discount to achieve rapid financing. Compared to traditional public offerings, PIPE does not require cumbersome approval processes and can complete capital injection in a short time, so it is often regarded as a 'strategic blood transfusion' tool during tight financing windows or uncertain market periods.

In the trend of crypto treasuries, PIPE has been given another function: to create a signal of 'institutional entry', drive rapid stock price increases, and provide 'market certification' for project narratives. Many listed companies originally unrelated to crypto have introduced funds through PIPE, purchased large amounts of BTC, ETH, or SOL, and quickly reshaped into a new identity of 'strategic reserve-type enterprises'. For example, SharpLink Gaming (SBET) announced a $425 million PIPE financing to establish an ETH treasury, and its stock price surged more than tenfold in the short term.

But the impact of PIPE goes far beyond the surface benefits. In terms of structural design, PIPE investors usually have better entry prices, unlocking arrangements, and liquidity channels. Once the company submits an S-3 registration statement, the related shares can be listed and circulated, and institutional investors can choose to cash out. Although S-3 is essentially just a technical operation and does not directly mean that selling has occurred, in a highly emotional market, this action is often misinterpreted as 'institutions starting to cash out', triggering market panic.

SharpLink's experience is a typical case: On June 12, 2025, the company submitted an S-3 registration statement, allowing PIPE shares to be listed for resale. Although the chairman and Ethereum co-founder Joseph Lubin publicly clarified 'this is a standard PIPE follow-up process in tradfi' and stated that he and Consensys had not sold any shares, the market sentiment was hard to recover. The stock price fell by 54.4% in the following five trading days, becoming a textbook demonstration of the structural risks of the PIPE model. Although the stock price rebounded later, the violent fluctuations of 'surge then plunge' reflected the structural faults in the PIPE process.