The stock market and the crypto market, once two groups that couldn’t stand each other, have quickly moved from courtroom battles to a cozy relationship.

A few years ago, it would have been hard to find a single word of praise from the mainstream stock market about the crypto market. A lukewarm "let’s agree to disagree" was already considered respect. The sentiment was mutual—the crypto market’s disdain for the stock market was equally visible. Most crypto enthusiasts saw the lofty stock market as having little to offer, viewing both as zero-sum games: who was any nobler than the other?

But this year, the two groups unexpectedly completed the process of meeting, understanding, and falling in love, quickly reaching a point of shared interests. Thus, "crypto stocks," the offspring of this romance, came into being.

Unlike tokenized U.S. stocks that aim to bring traditional equities onto the blockchain, crypto stock companies have successfully packaged tokens in the form of stocks, using backdoor listings to hold crypto—essentially the same capital narrative with a new facade.

This time, however, it’s not crypto enthusiasts footing the bill but the once-distant stock market investors.

01 What Are Crypto Stocks?

While it’s hard to pin down a universal definition, crypto stock companies are generally defined as publicly traded firms that establish reserves of one or more cryptocurrencies within their corporate structures, bringing crypto onto their balance sheets. Depending on the criteria, crypto stocks can be categorized differently, broadly divided into three types: by reserve currency, by business model, and by the entity behind the crypto stock.

Let’s start with crypto treasuries. These refer to corporate investment models where companies hold reserves of specific cryptocurrencies. Initially, there were only Bitcoin treasury companies, but Ethereum later emerged as a contender. Today, with looser regulations, a plethora of altcoin-based crypto stocks have appeared, covering SOL, BNB, Hyper, XRP, and DOGE, among others. Data shows there are now 166 Bitcoin treasury companies and 72 Ethereum treasury companies, while altcoin-focused firms remain relatively limited. For example, SOL’s notable treasury companies include only DeFi Development, Upexi, and Sol Strategies, while BNB got a later start, with VAPE being the only official player.

Among all crypto stocks, the most prominent is undoubtedly Strategy. Starting its pivot in 2020, Strategy turned its fortunes around with Bitcoin, soaring from a nearly bankrupt company with a $16 stock price to a Nasdaq 100 giant with a share price near $400 and a market cap of $111.83 billion, setting a successful example for the market.

At its core, most treasury companies rely on market cap premiums. Take Strategy as an example: its valuation model depends on the premium rate, using equity dilution to increase BTC holdings per share, thereby boosting its market cap. In simple terms, it designs a ratio between equity and Bitcoin, uses bonds and stock sales to buy Bitcoin, and then leverages Bitcoin’s appreciation to fuel capital operations, creating a positive feedback loop. As of August 10, 2025, Strategy had acquired 628,946 BTC at an average price of $73,288, totaling ~$46.09 billion. At Bitcoin’s current price of $119,000, these holdings are worth over $74.8 billion, making Strategy the largest publicly traded holder of Bitcoin.

02 How Do They Operate?

Why do investors accept or even tacitly endorse these premiums?

First, market expectations for cryptocurrencies are key. Optimism about crypto’s future drives willingness to pay premiums. Second, treasuries meet the needs of investors who, for various reasons, can’t directly access crypto but still want exposure—outsiders unfamiliar with crypto, regulated institutions, funds, and legal entities, etc. In other words, treasuries lower the investment barrier, so participants are willing to pay a "compliance premium," albeit one predicated on crypto’s continued rise.

Another notable reason is treasury companies’ unique leverage models. They often raise large sums at ultra-low rates, enabling them to scale purchases and withstand market downturns. According to crypto consultancy Architect Partners, U.S. public companies have announced plans to raise over $91 billion for crypto purchases this year alone.

Where does the money come from?

Looking at current crypto treasury firms, the four main fundraising methods are PIPE (private investment in public equity), ATM (at-the-market offerings), CB (convertible bonds), and SPAC (special purpose acquisition companies). PIPEs involve private sales of financial products to specific investors via brokers or OTC platforms, bypassing public markets for quick liquidity. ATMs involve issuing additional shares at market prices, a slower but more flexible process. Convertible bonds are more cunning—companies borrow money that can later be converted into cash or stock, delaying sell pressure. SPACs are more familiar, using backdoor listings to raise funds. Strategy, a fundraising standout, initially relied on convertible bonds but has shifted to ATMs as its stock price skyrocketed.

In terms of business models, crypto stock companies fall into two categories. One follows Strategy, making hoarding crypto their core business and relying on premiums for capital appreciation—essentially, crypto reserves are the business model. Due to low barriers, this category has attracted many copycats. The other is more rational, adding treasury operations to existing businesses to supplement revenue, particularly common among Ethereum treasury firms, as ETH offers staking yields beyond Bitcoin’s store-of-value appeal.

In fact, entity-based distinctions are most apparent among Ethereum treasury companies, which can be split into "native" and "Wall Street" camps. SharpLink represents the former, with shareholders spanning Ethereum’s ecosystem—native giants like Consensys, Pantera, and Arrington, alongside infrastructure players like GSR and Ondo Finance. BitMine, however, is a Wall Street product, backed by mainstream investors like Galaxy Digital, ARK Invest, and Founders Fund. Currently, their ETH arms race is intensifying, with BitMine—more aggressive and with a CEO who’s a better storyteller—pulling ahead, raising 83,313 ETH in 35 days to surpass SharpLink’s 28,070 ETH and become the world’s largest Ethereum treasury.

03 Will Altcoins’ Fate Repeat in Crypto Stocks?

The rise of crypto stocks isn’t purely about supporting cryptocurrencies. Whether it’s paying lip service to decentralization or spinning new narratives like "digital gold," companies are ultimately motivated by plain old profit.

Among hundreds of crypto stock firms, many chase trends. The feedback is swift—nearly all see rapid, massive price surges after announcing their moves. Examples abound: SharpLink’s stock jumped 433.18% on May 27 after revealing its treasury strategy, peaking at $124.12 on May 30 (a 24x gain from its $5 low). BitMine went from $4.26 on June 27 to $135 by July 3. Even small caps saw huge gains: Swedish biotech H100 Group, nearly bankrupt, surged 15x in a month after embracing Bitcoin treasuries, while Bluebird Mining Ventures recovered 4x its stock price.

After nearly two months of FOMO, the crypto stock frenzy is cooling. Strategy’s premium has dropped from 2x to 1.49x, and BitMine, now the top ETH buyer, has fallen from $135 to $62.44—even as ETH climbs past $4,600.

Interestingly, crypto stocks mirror the crypto market’s polarization. Per Architect Partners, crypto treasury stocks holding Bitcoin, Ethereum, or Solana have a median return of 92.8% post-announcement, while those holding altcoins median -24%. From market data, most altcoin-based crypto stocks have halved from their peaks. Hyperion DeFi (holding Hyperliquid), renamed HYPD on July 2, is down 62%.

Altcoins’ woes seem to be replaying in crypto stocks. Poor altcoin performance, amplified by leverage, triggers cascading effects, leaving late buyers stranded at the top. Beyond altcoins, the link between crypto and stocks magnifies cross-market impacts.

Crypto stocks have created a new narrative. For projects, they provide buy-side support, price stability, and marketing boosts. Some even use self-run treasuries for price manipulation—"left foot stepping on right foot"—to pump and dump simultaneously. ETH’s 58% monthly surge, fueled by institutional FOMO, exemplifies this. Collaborations between foundations and companies (e.g., Mill City Ventures III and the SUI Foundation) are rising. For firms, crypto stocks offer strategic pivots, quick profits, or new business lines—hard to resist for long-term attention.

For investors, crypto stocks bypass wallet complexities and compliance hurdles, offering a new path to diversify portfolios and chase higher returns.

But downsides exist. Treasuries hinge on crypto’s intrinsic value and long-term trends. Beyond BTC (now under institutional wings), even ETH lacks certainty. In a downturn, crypto stocks face a double whammy: falling token prices drag down stocks, and selling worsens the spiral—especially since many buy crypto with debt. Investors must also brace for wilder volatility; token price swings dwarf roller coasters.

While crypto stocks are booming, long-term prospects are murky, especially for altcoin-focused ones, given altseason’s unlikely return. Among majors, top players may monopolize gains; for altcoins, success hinges on project teams’ connections, with official or well-backed entrants having better odds. One thing’s certain: many entrants will face a reckoning.

For the average crypto participant, skipping the fuzzy stock experiment and buying tokens directly might be the best choice.