Summary Nearly a year after the SEC opened the door to crypto ETFs, REX-Osprey has launched a Solana investing and staking ETF under the ticker SSK on the CBOE exchange. The technical picture is not looking the most bullish for Solana, despite a solid rebound on the Support 2. Prices formed a lower high double top and prices have been retracing since with RSI Momentum close to oversold on shorter timeframes. By Elior Manier The current session is marked by low volumes but still sees pockets of volatility, with broad profit-taking kicking in after two consecutive risk-on weeks. Global equities are in the red, and cryptocurrencies are also under pressure. Despite the growing institutional interest, crypto markets remain somewhat rangebound. Bitcoin ( BTC-USD ) has been trading between $100,000 and $110,000 for over a month, while Ethereum ( ETH-USD ) continues to consolidate between $2,300 and $2,700. Investor access to cryptocurrencies is gradually becoming more streamlined, especially with the increasing adoption of financial instruments like ETFs. Nearly a year after the SEC opened the door to crypto ETFs, REX-Osprey has launched a Solana ( SOL-USD ) investing and staking ETF under the ticker SSK on the CBOE exchange. While today's pullback is part of broader market softness, let's take a closer look at Solana's technical picture to assess ongoing trends and potential levels of interest. Solana Technical Analysis Solana Daily Chart Solana Daily Chart, July 4, 2025 - Source: TradingView The technical picture is not looking the most bullish for Solana, despite a solid rebound on the Support 2 (levels detailed right after), there is an ongoing downward trendline that bulls will have to break to the upside to regain control. Inflows into the ETFs are key to support prices in this new form of cryptocurrency investing, and has helped to hold ETH and BTC prices at their levels for quite some time - Let's see how the launch of the SSK ETF helps in that aspect. Levels to keep on your chart: Support Levels: Immediate support $145 Support 2 $125 to $132 Support 3 $100 to $105 Resistance Levels: Current Pivot $150 to $160 Resistance 1 $200 to $205 Resistance 2 $225 to $232 Resistance 3 $255 to $265 ATH $295 Solana 2H Chart, July 4, 2025 - Source: TradingView Prices formed a lower high double top and prices have been retracing since with RSI Momentum close to oversold on shorter timeframes. Buyers will have to hold the last bullish confluence before bears get into full control: The upward trendline, 2H MA 200 and more importantly, the immediate $145 support. Solana vs Ethereum Relative Performance SOL/ETH Price Ratio, July 5, 2025 - Source: TradingView One of the themes of past year crypto investing was the rewiring of flows into Solana (and even more dominantly Bitcoin) - with major outflows from the ETH as the Solana protocol offers pretty similar technology but somewhat cheaper and more efficient for blockchain development. This led to a massive adoption of SOL, pushing the crypto to its $295 all-time highs, particularly towards the end of 2024. Since, Ethereum has found some strength. The upcoming challenge for markets will be to see if altcoins get more attraction as Bitcoin levels stay elevated, and if the new Solana ETF captures a bigger market share. Key levels to hold for the SOL/ETH Price Ratio is 0.057 (5.70%) - current levels and 0.03725 (3.725%) on the downside. Further upside above 7% and 9% (current highs 0.093) for Solana performance above Ethereum. Safe Trades! Original Post Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

2025-07-05 19:30

Summary BitMine Immersion has secured a pivotal $250 million PIPE to initiate an Ethereum corporate treasury strategy, fundamentally redefining its capital structure. The capital fuels a strategic shift towards a large Ethereum treasury and business expansion into higher-margin Bitcoin Treasury Advisory and Mining-as-a-Service offerings. BMNR trades at a 52.82x price-to-hold ratio (current BTC only) and a pro forma 3.29x (including planned ETH treasury), representing a notable premium compared to peers like MSTR, MARA, and RIOT. While the capital infusion is a significant positive, a hold rating is initiated due to the current rich valuation. Bitmine Immersion Technologies ( BMNR ) is the latest company to adopt the crypto corporate treasury strategy. As publicly traded companies increasingly adopt the crypto-backed balance sheet approach, it is becoming increasingly important for investors to develop a framework for evaluating companies pursuing such strategies. In the last month, I've covered a series of companies that recently adopted a crypto-backed corporate balance sheet. And part of the approach I've taken to analyze these companies includes an assessment of the underlying business (if any), the strategic intent for adopting a crypto treasury strategy, and the potential near and long-term implications for the company's capital structure. My recent coverage of SharpLink Gaming ( SBET ), a digital sports media and performance marketing firm, that adopted an Ethereum ( ETH-USD ) corporate strategy with a $463 million ETH buy last month, showed significant supply overhang from equity fund raises and potential for heavy dilution. Another company I covered recently was Next Technology ( NXTT ), a Chinese tech firm that touts AI and blockchain service offerings in addition to its recent pivot to a Bitcoin corporate treasury strategy. An in-depth analysis revealed that no tangible backstop business exists yet for the company, nor were there any working products in its acclaimed tech verticals, nor revenue, nor backlog yet. This underscores the critical importance of due diligence when investing in crypto treasury companies. This article initiates coverage on Bitmine Immersion, examining its core Bitcoin ( BTC-USD ) mining business and its pivot to Bitcoin and Ethereum treasury strategy, and the broader implications of this pivot. The main goal is to give investors a grounded view of what's driving this stock, how sustainable the thesis is, and whether there is long-term value beyond the current hype created by the crypto treasury pivot. Bitmine Immersion Technologies - Company Profile Bitmine calls itself a "Bitcoin network company that drives value through BTC treasury and multiple Bitcoin income streams." As its primary business, Bitmine mines Bitcoin just like any other Bitcoin miner. The company currently operates two mining sites in Texas and two mining sites in Trinidad and Tobago. One of Bitmine's main differentiators in the mining business is its use of immersion-cooled infrastructure, which involves submerging ASIC miners in thermally conductive liquid instead of relying on the more common air cooling. Immersive cooling isn't novel or proprietary to Bitmine, but Bitmine is one of the miners that has fully adopted this cooling method as the only operational standard. I covered the benefits of immersive cooling last year in an article for MARA Holdings ( MARA ), where I talked extensively about MARA's two-phase immersion cooling system. Just a side note, If you are interested in understanding what it entails and the implications for mining operations and long-term OpEX reduction, you can refer to that piece on Mara Holdings , which explains it in detail. Bitmine calls part of its model "synthetic mining," which is to acquire Bitcoin hashrate not by buying hardware but via leasing or contract-based access to mining power, essentially paying for the right to use the hashrate without owning the underlying machines. It is like an institutional-grade version of cloud mining. In cloud mining, smaller retail miners typically prepay for a fixed slice of hashrate from a provider, while in this case, it is large-scale miners that lease the equipment or the output through structured agreements. Synthetic mining is also different from colocation or traditional hosting arrangements, in that, in synthetic mining, as Bitmine defines it, hashrate exposure is secured via futures or revenue-sharing contracts, and they do not own or operate the physical ASICs themselves. An instance of this is the 12-month forward contract with Luxor, a hashrate derivatives provider, which allowed Bitmine to pre-sell future hashrate in exchange for upfront capital to finance new ASICs. BMNR was uplisted to NYSE last month, following a 1 for 20 reverse stock split in May, and a public offering of 2,250,000 shares of its common stock at $8.00 per share. BMNR is up over 3,000% since announcing the initiation of an Ethereum treasury strategy last month. How A PIPE Capital Infusion Changes The Math For Bitmine Bitmine has had a crescendo of catalysts in the space of a month that has set off a rally for the stock: NYSE uplisting in early June, followed by the announcement of the purchase of 100 BTC for the Bitcoin treasury strategy. The 100 BTC was purchased with the $18 million raised from the public offering mentioned earlier, and an additional 54.167 BTC were purchased on June 17, bringing the company's total BTC in treasury to 154.167 BTC. Then, the most recent crown jewel of $250 million PIPE to initiate an Ethereum treasury strategy . These are well-timed announcements, if you ask me. Bitmine has also launched a Bitcoin Treasury Advisory Practice , an expansion into potential higher-margin service offerings. As part of this push, the company signed a $4 million deal with a U.S.-listed firm to lease 3,000 ASIC miners through 2025 and provide $800k worth of consulting services focused on Bitcoin Mining-as-a-Service (MaaS) and corporate treasury strategy. According to management, this single deal surpasses Bitmine's total FY24 revenue which was $3.3 million, suggesting that advisory services could become a meaningful growth driver for the company. In the recently released financials of Bitmine's latest 10-Q , which is for fiscal Q3 2025, there are several interesting line items in the analysis of the capital structure of Bitmine. I'll also show how the announced $250 million PIPE raise is the most significant and transformative event in the history of the company by integrating the impact into the balance sheet of the company. Income statement (10-Q) On the income statement for FQ3, we can see the emergence of consulting revenue of $35k. Though it is still a small figure compared to total revenue, its emergence on the income statement is still evidence of Bitmine's new Bitcoin treasury advisory business line. Another consideration is that the majority of the consulting revenue from the $4 million deal is still unrecognized, hence the large increase in Customer Advances line on the balance sheet. Balance sheet (10-Q) One noteworthy line on the balance sheet is the over 100% increase in customer advances, jumping from $703k to $1.8 million YoY, clearly showing upfront payments for services yet to be rendered, a direct reflection of the new revenue streams. Beyond this, the balance sheet also shows a substantial increase in cash and cash equivalents, rising from $499k to $1.4 million. Cryptocurrencies held also increased from just $78k about a year ago to $1.2 million as of FQ3 end in May. Current assets increased from $1.56 million to $2.18 million, and that number is likely to jump significantly when the $250 million PIPE closes and most of the proceeds go to the planned Ethereum treasury holdings. And considering that the fund is from a PIPE equity raise, there will likely not be a matching increase in current liabilities. That would put Bitmine's balance sheet on a relatively similar attractive footing with peers that have also adopted a BTC and ETH treasury strategy like Bit Digital ( BTBT ). But for now, and based on the FQ3 results, Bitmine's balance sheet lacks significant underlying financial strength in short-term liquidity. To make the situation worse, loans payable to related parties and the interest accrued on these related party loans are about $2.4 million in total. This alone exceeds the $2.18 million total current assets of the company, which is an alarming concern. Bitmine appears to be a highly leveraged business. Total shareholders' equity in the FQ3 balance was $2.9 million. This makes up about 35% of the $8.3 million in total assets, while the remaining ~65% ($5.4 million of total assets) are funded by liabilities. Bitmine's debt-to-equity ratio ($5.4 million / $2.9 million) is currently 1.87. For every dollar of owner's capital, Bitmine has roughly $1.87 in debt. This high leverage is on the verge of being rectified. $250 million from the PIPE means equity will increase by roughly that amount, which will cause the debt-to-equity ratio to plummet and deleverage the company's balance sheet. Shareholders' equity breakdown (10-Q) Bitmine's FQ3 balance sheet shows a significant Accumulated Deficit of $13.9 million, which is the cumulative net losses the company has incurred over its history, and this directly erodes the total Stockholders' Equity because it is recorded as a negative component of equity. While the company has managed to raise substantial capital in the past, evidenced by the $16.8 million in Additional Paid-in Capital [APIC], this capital has largely been offset by the company's historical net losses, leaving a net shareholders' equity of only $2.9 million. The shareholders' equity would have been larger if not for the accumulated deficit. Here's where the PIPE funds play another vital role in Bitmine's capital structure, as it will certainly swell the APIC and in turn swell total equity. Almost every dollar will go into the APIC line as the $4.50 price from the PIPE is significantly above the nominal par value of BMNR ($0.0001 per share). If we infuse the ~$250 million into the APIC, it will surge to over $266.8 million (from the current $16.8 million), leading to a massive increase in total equity. With Bitmine's total shareholders' equity of $2.9 million, a net loss of, say, $2 million in a quarter, would wipe out a significant portion (over 60%) of its equity. But with the ~$250 million injection into the equity, the total equity becomes ~$252.9 million; and under this new equity base, if the company still loses $2 million in a quarter, that loss would represent only a tiny fraction (less than 1%) of its new equity base. This significantly increases the company's financial resilience and provides a substantial buffer against future operational losses. Like I said earlier in this piece, the $250 million from the PIPE is the crown jewel and game-changer for Bitmine. The current capital structure of the company, characterized by high leverage and a small equity base largely eroded by accumulated deficit, but the PIPE fundamentally transforms this by infusing massive equity, drastically reducing reliance on debt, and enabling all of the company's strategic pivot. By the time FQ4 results are released and the new capital structure is reflected, I believe Bitmine will have a more attractive balance sheet and greater financial flexibility, like several of its peers. BMNR is up a lot lately and for good reason; the market has reacted to the $250 million PIPE and the ETH treasury strategy. My main goal in this piece has been to help readers understand the nuances beyond just the fresh injection of funds for ETH purchase for treasury purposes. The ETH pivot is what the market has largely reacted to. But beyond that pivot, I've shown the dramatic transformation of the company's capital structure and the journey toward enhanced liquidity and financial resilience. BMNR price trend (Seeking Alpha) Bitmine currently holds ~154 BTC, which has a carrying value of $16.6 million at the current $107,700 per BTC spot price as of July 4, 2025. Then, assuming it buys ETH with the total $250 million from the PIPE, that would give a total crypto assets holdings value of around $266.6 million (if we add the ETH purchase to the BTC holding). At BMNR current market cap of $877 million, BMNR's pro forma price-to-hold ratio (stock price against the per-share value of their crypto holdings) would be 3.29x. If we consider only the current BTC and do not include projected figures for the ETH treasury, we'd have a 52.82x ($877 million / $16.6 million) p/hold multiple for BMNR. This is in very expensive territory and not on the side of undervaluation to net asset value when compared to crypto treasury peers with stronger visibility and more robust core operating businesses, like Strategy ( MSTR ), Riot Platforms ( RIOT ), or MARA. This reinforces that BMNR is expensive at the current price level. Top 5 Bitcoin treasury holdings ( bitcointreasuries.net) MSTR currently trades at a p/hold multiple of 1.76x, MARA trades at 1.16x, and RIOT trades at 2.10x (you can get each of these p/hold numbers by dividing the market by the dollar value of the Bitcoin holdings for the respective companies). Bitmine's current p/hold is way more expensive and even the pro forma p/hold of 3.29x still suggests a notable premium relative to its digital asset holdings, especially if we consider the fact that all the aforementioned companies in the p/hold comp in this analysis all have way more robust core businesses and substantial revenue compared to Bitmine's. I am therefore initiating coverage on BMNR with a Hold rating. As an investor, I'll be closely monitoring how the company deploys the fresh capital, grows its treasury assets, and executes on its core Bitcoin mining operations. These all will be key indicators of whether Bitmine can transition from speculative upside to sustainable value creation, and whether its current valuation can eventually justify a long-term investment thesis.

2025-07-05 15:00

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2025-07-04 17:10

Summary Hut 8 Mining's stock has surged 86% since April, driven by a strong technical uptrend and bullish momentum indicators. Despite the bullish chart, fundamentals have deteriorated sharply, with revenue and earnings estimates slashed across the board. A new Ontario power contract provides long-term cash flow visibility but introduces operational risks and uncertainty in execution. Given the soaring valuation and rising uncertainty, I am downgrading Hut 8 from Buy to Hold—chart strength is offset by weak fundamentals. An interesting phenomenon has occurred with Bitcoin miners in recent years, in that as a group, they’ve largely been diversifying away from Bitcoin mining and into related fields. One such company that has done a lot of that is Hut 8 Mining (HUT) . The last time I covered Hut 8 was in April, and I was quite bullish. The stock is up 86% since then following a blistering rally. Of course, April 3 rd was just before the low in US equities, so a lot of stocks have posted huge gains since then. Still, I’m taking a victory lap with an 86% gain in three months. Does that make the stock expensive today? Sadly, yes it does. I’m a bit torn on Hut 8 now, so I’m moving from Buy to Hold. The Chart Couldn’t Be More Bullish The old saying in technical analysis is that nothing is more bullish than prices going up. There’s been plenty of that with Hut 8 in the last three months, as we can see a beautiful, steep uptrend channel that’s still very much in play today. StockCharts Unless and until that channel is violated, one can reasonably continue to trade it. The steepness of it dictates that it obviously cannot last forever, but so far so good. The stock is ahead of its moving averages, and the latter are trending steeply upwards. From a momentum perspective, I see nothing but validation for the bulls. The PPO has been in positive, bullish configuration for two months and is strengthening again. The accumulation/distribution line has gone straight up since the weeks prior to the April bottom. The RSI looks very similar to the PPO. There are absolutely zero concerns for the chart right now and it’s unequivocally bullish. Support will be the prior relative high at ~$19.50, and/or the rising 20-day EMA, which is currently $18.16 but rising quite quickly. Any price above those levels is still full steam ahead for the bulls. Fundamentals Are A Different Story I place a lot of value in technical analysis, as anyone who has read my work knows. The chart looks great, but I’m afraid the fundamental situation has deteriorated since my April update. Seeking Alpha Revenue and earnings estimates have been obliterated in a short period of time, making the stock much more expensive on any measurement one can think of. All seven revisions in the past three months have been down, and markedly so. Revenue for 2025 is down ~$35 million, and earnings are down from a loss of 27 cents to a loss of $1.60. For 2027, revenue is down $83 million and earnings from $2.47 to 86 cents. These are massive reductions in revenue and earnings estimates, but the curious thing is that the stock has almost doubled. In this kind of situation, either the stock is just tremendously expensive, or Wall Street – the ones with big buying power to move stocks – simply believes estimates will get better over time. In other words, the fundamentals and the price chart are diverging massively, which means one of them is 'wrong'. I’m not interested in the task of trying to guess, but the fact that the chart is quite bullish and estimates just aren’t means I’m neutral. What could change that is the quite sizable news that Hut 8 secured a five-year contract in Ontario to run each of its four natural gas-fired power plants with the Ontario Independent Electricity System Operator. The OIESO is a government-backed entity with an AA3 credit rating, meaning the payment risk to Hut 8 is basically nothing. This long-term, highly stable payment stream is terrific for cash flow visibility in the coming years. The agreement is for 310MW of power generation capacity starting on May 1, 2026 at $530 Canadian dollars (~$390 USD) per MW-business day, with the potential for escalations over time. Anyone familiar with Hut 8’s stated strategy will not be surprised by this deal. Investor presentation The company has been focusing on developing its power business, and the Ontario deal is a tremendous success towards achieving that goal. We’ll see how it plays out, but this is exactly what Hut 8 wanted. On the flip side, there are a lot of variables in play that will determine if this venture is ultimately a success. Below we have an example of how Hut 8 accounts for power operations, and there’s a fair amount out of its control. Investor presentation That includes things like the market price and cost of fuel, and to a certain extent, operations and maintenance costs. Now, uncertainty can provide volatility in both positive and negative directions, but before you remortgage your house to run out and buy Hut 8 stock, keep in mind there is a lot that needs to go right between now and May 2031 for this deal to add meaningfully to earnings. I’m not suggesting it won’t happen, but the risk is high and with the share price having exploded higher already, the margin for error is extremely low, in my view. This volatility is exacerbated by the fact that Hut 8’s margins are already extremely volatile. TIKR These are quarterly figures and while we see Hut 8 has done a great job of growing the top line, even gross margins (forgetting about operating margins) have been all over the place. In theory the Ontario deal should help stabilize this. But if there are big fluctuations in some of the variables we looked at above, that may simply make it worse. The company still has Bitcoin mining and compute segments that are also quite volatile. A Soaring Valuation Amid Rising Uncertainty Given that Hut 8 doesn’t have earnings to speak of at the moment, we can try to value it based upon price to forward sales, which is below. TIKR We can see the ramp higher since the April low, which was just over 4X forward sales. We’re at more than double that level now, as the stock price has almost doubled and revenue estimates have gone meaningfully lower. As much as I love the look of the price chart, I simply cannot ignore the fundamental situation including estimates and the valuation. Those two balance each other out; and for me, the stock is a hold today. The chart is too good for a sell rating, but the fundamentals aren’t good enough for a buy rating.

2025-07-04 17:08

Summary Bitcoin climbed 3% on strong ETP inflows while altcoins slumped, deepening a divergence that underscores both growing institutional BTC demand and fragility across the broader crypto landscape. Since January 2024, only 36% of the top 300 tokens are up. 25% more tokens have dropped over 50% than gained that much, and in 2025 alone, 7.5x more tokens declined over 50% than appreciated similarly. On June 25th, Bitcoin miner Bit Digital announced its transition into a pure-play Ethereum staking and treasury company, initiating the wind-down of its Bitcoin mining operations and beginning a gradual conversion of its BTC holdings into ETH. Bitcoin climbed 3% on strong ETP inflows while altcoins slumped, deepening a divergence that underscores both growing institutional BTC demand and fragility across the broader crypto landscape. June was a quiet month for crypto, with most tokens drifting lower amid declining volatility. Bitcoin ( BTC-USD ) was the standout, rising +3% for the month on steady ETP inflows totaling $4.5B . The divergence between BTC and altcoins continued to widen. The MarketVector Smart Contract Leaders Index (MVSCLE) fell (-5%) in June, highlighting the continued underperformance of altcoins over the past 18 months. Price Returns June YTD Coinbase 42.12% 41.16% MarketVector Global Digital Assets Equity Index 29.20% 15.17% Nasdaq Index 6.57% 5.48% S&P 500 Index 4.96% 5.50% MarketVector Decentralized Finance Leaders Index 4.19% -48.35% Bitcoin 2.62% 14.70% Ethereum -2.79% -25.09% MarketVector Smart Contract Leaders Index -3.68% -26.83% MarketVector Infrastructure Application Leaders Index -13.11% -45.92% MarketVector Meme Coin Index -17.18% -52.30% Source: Bloomberg as of 6/30/2025. Index performance is not representative of fund performance. It is not possible to invest directly in an index. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein. Since January 2024, only 36% of the top 300 tokens are up. 25% more tokens have dropped over 50% than gained that much, and in 2025 alone, 7.5x more tokens declined over 50% than appreciated similarly. Just 12% are up YTD, underscoring the increasingly skewed, Pareto-like nature of the crypto market. June Leaders: Arbitrum’s ARB ( ARB-USD ): +6% Tron’s TRX ( TRX-USD ): +4% June’s Laggards: Cardano’s ADA ( ADA-USD ): -18% Sui’s SUI ( SUI-USD ): -15% ARB rebounded from an early-June drawdown to end the month up 6% . This move followed Robinhood’s announcement to list up to 200 tokenized equities on Arbitrum for EU investors starting June 30. Long term, Robinhood aims to migrate this to its own blockchain, developed by Arbitrum creator Offchain Labs. While the news is positive, it’s unlikely to drive material fee growth or value accrual to the ARB token. The commercial arrangement compensates Offchain Labs, not ARB holders. Exchange Volumes and BTC Volatility Trading volumes dropped 29% across centralized exchanges (CEXeS) and were flat YoY. Spot volumes in BTC and ETH fell to multi-year lows relative to futures (BTC ( BTC-USD ): 19% , ETH ( ETH-USD ): 13% ). DEX volumes hit $332B in June, setting a new DEX/CEX ratio high of 28% , up from 21% in May. Return Profiles of Top 300 Non-Stable Tokens - Most Returns Negative Over All Time Periods Source: Artemis XYZ as of 6/30/2025. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein. BTC volatility dropped to 33% , the lowest since summer 2024. This was partly seasonal but also reflects structural demand: ETPs bought 42K BTC in June and BTC treasury firms added another 68K , more than offsetting June’s 13.5K BTC mined. This steady absorption suppresses volatility by providing a consistent bid. Crypto Treasury Companies An additional volatility dampener comes from the emergence of BTC treasury companies. Twenty-one new entities adopted the MicroStrategy-style strategy in June. These firms use debt issuance and equity to accumulate BTC, often trading at premiums to their holdings based on bullish BTC assumptions and easy capital access. These firms often trade at premiums to their BTC holdings, but the model carries major downside risk. A BTC drawdown >25% could crash their mNAVs, as seen with MSTR in 2022. In extreme cases, forced BTC sales could trigger recursive declines. While innovative, these firms are high-risk, option-like plays on BTC. In May we wrote about how MicroStrategy ( MSTR ), the pioneer of BTC Treasury Strategies, employs financialization to gradually increase BTC exposure for common shareholders. Currently, these entities are benefitting from a positive market environment buoyed by BTC price appreciation. With BTC going up in value, these companies can more easily finance additional BTC exposure by issuing securities receptive capital markets. If we assume that the market is rationally valuing these companies based upon terminal BTC holdings and a terminal BTC price in the future, this valuation will increase during market upswings. This is because BTC price projections will become more bullish and each company’s ability to finance new BTC purchases will also increase. The result is a higher terminal valuation for each BTC treasury company. As such, many of these companies are trading a premium to their holdings of BTC based upon a rosy outlook for Bitcoin and the financing market for Bitcoin treasury companies. However, things can turn grim very quickly for these Bitcoin companies if BTC experiences one of its typical, large drawdowns of (> -25% ). MSTR demonstrated this negative dynamic during the summer of 2022 when its mNAV fell as low as 0.7 . If BTC price collapses, the downside will translate into mNAV degradation for many of these BTC companies. And, if these businesses are unable to fund operations or make debt repayments, market participants may begin to sense these BTC companies may be forced to liquidate their BTC holdings. This may cause recursive price depreciation for both the treasury companies and BTC. As a result, while we see some of these vehicles as interesting financial experiments to give holders option-like exposure to BTC, we recognize the massive risks posed to investors in these companies. Solana Updates Solana Has the 2nd Highest "Blockchain GDP" Source: Token Terminal as of 6/30/2025. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein. With an ETH ETP approved last July, anticipation was high for a SOL ETP in 2025. That milestone materialized on July 2 with the launch of the REX-Osprey Solana + Staking ETF (SSK), which traded an impressive ~$40M on its first day. However, SSK is not a spot-based ETP in the traditional sense. Instead, it functions as a fund-of-funds, holding a Cayman subsidiary that invests in SOL and participates in staking via providers like Jito. The structure sidesteps direct SEC approval of spot SOL custody by leveraging the 1940 Act and a C-corp wrapper. While a major step forward, SSK comes at a cost, charging a 1.4% expense ratio, and leaves room for future products with purer exposure. As the first spot SOL ETP filer, we remain optimistic that a more direct, staking-enabled structure could be approved, offering lower fees, improved redemption mechanics, and greater transparency at launch. We believe Solana is well-positioned to underpin the emerging 'Internet Capital Markets', a digital environment for real-time financial exchange. Its strengths include: Latency: Solana confirms transactions in 400ms with 5s finality which is vastly quicker than BTC (1 hour) or ETH (13 min), critical for real-time commerce. Throughput: Solana averages 1.5K TPS with bursts >10K TPS, enabling cheap, sub-cent microtransactions for mass-scale applications. Ongoing Innovation: With teams like Anza and Firedancer, Solana aims for 100K TPS within a year, 1M TPS in three and this aggressive roadmap is unique among blockchains. Developer Base: Solana hosts ~6,400 active developers ( ~25% of all crypto devs), driven by its rich tooling and performance. Solana's application layer continues to grow across verticals, including trading, liquid staking, consumer tokens, and anti-bot infrastructure. Key contributors to Solana GDP in June included: Most Top Solana Apps are in Trading or Stablecoins Source: Token Terminal as of 6/30/2025. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein. Raydium Dominates Activity - 2x Other 9 Apps Combined Source: Token Terminal as of 6/30/2025. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein. Solana Trading Volumes Cluster Around a Few Top Apps Source: Dune @Ally as of 6/30/2025. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein. Jito: Solana liquid-staking protocol that issues JitoSOL and shares validator MEV earnings with stakers. This application derives value from all DEX activity by means of earning MEV revenues. Raydium: The top Automated Market Maker on Solana whose liquidity pools plug into a central on-chain order book for combined AMM and limit-order depth. Adds revenues through trading activity. pump.fun: No-code Solana launchpad for new tokens that provides novel assets that drive new trading volumes. The tokens launched on Pump were responsible for as much as 90% of Solana trading volumes in January 2025. Meteora: A novel AMM whose pools adjust fees and token balances algorithmically to reflect market conditions. Meteora’s volumes are up 272% YoY. Orca : Solana AMM supporting concentrated-liquidity “Whirlpool” pools for capital-efficient swaps. Orca was once a more dominant DEX but has lost market share to competitors who focused on memecoins falling from 31% market share in 1Q2024 to 15% market share by 1Q2025. Axiom Trade: Axiom is a recent creation to prevent Solana users from being front run by trading bots. Trading volume has grown 40x since Jan 2025 to June 2025, $8M -> $3.2B . Trojan: A trading application that simplifies trading by using Telegram as a wallet and to execute trades. This provides a more “social trading” experience. The app has grown from 160K monthly active users in Jan 2025 to 350K monthly active users in June 2025. Photon : A competing telegram trading application to Trojan that earned $6.9M in revenue over the past month. BullX: A platform that combines complex trading features to enable more sophisticated trading strategies. The application averages 260K monthly active users in June 2025 and generated $2.6M in revenues. SOL ETP and Staking Considerations A key feature for a successful SOL ETP will be staking integration. Without it, investors could lose out on 7–10% annual yield and suffer dilution, as roughly half of SOL’s yield derives from inflationary issuance. However, including staking introduces multiple challenges: Operational risks: These include validator slashing, key management failures, or governance misalignment. Tax uncertainty: There is limited IRS guidance on staking income treatment. Principal-agent issues: Validators may profit from opaque activities (e.g. MEV) not passed through to ETP holders. Redemption constraints: While ETP shares must redeem T+1, unstaking SOL can take ~2 days (and longer for ETH). Market makers must hedge this gap at a cost (~9bps/day at a 40% cost of capital). Some solutions for redemptions have been presented, but none of these are ideal. One idea is to let market makers charge investors for early access to unstaked tokens, but that model assumes liquid and cheaply priced withdrawal markets. During bouts of volatility, the cost of capital soars and the exit fee does too. Another idea is to hold a liquid staking token (LST), yet regulators in several jurisdictions treat these tokens as unregistered securities. Additionally, they are prone to de-pegging under stress. In the summer of 2022, Lido’s stETH traded at ( 88% ) percent of its net asset value. LSTs also introduce additional smart-contract risks that are hard for typical ETF investors to evaluate. We are working with validators to model these tradeoffs and remain optimistic about a path forward. With transparency, coordination, and thoughtful structuring, a staking-enabled SOL ETP is achievable. Ethereum Updates Spot ETH ETPs See Largest Monthly Inflows of 2025 Source: Glassnode, Yahoo Finance as of 6/29/2025. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein. Investors poured ~$1.1B into Ethereum ETPs in June, the second-largest month since their launch in 2024. Actual institutional demand for ETH may be even higher, as this figure coincides with a renewed interest in using ETH as a treasury asset. We first noted this trend in May, when several public companies began emulating the treasury strategy popularized by Strategy (MSTR), but using ETH instead. While both ETH ETPs and ETH treasury strategies are bullish for the asset, they compete for similar pools of capital. Source: Yahoo Finance, Company Press Releases as of 6/30/2025. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein. On June 25th, Bitcoin miner Bit Digital ( BTBT ) announced its transition into a pure-play Ethereum staking and treasury company, initiating the wind-down of its Bitcoin mining operations and beginning a gradual conversion of its BTC holdings into ETH. However, the stock opened down (- 17% ) the following morning, raising questions about market appetite for ETH treasury-focused firms. In contrast, on June 30th, newly uplisted BitMine Immersion Technologies ( BMNR ) announced a $250M private placement, selling 55,555,556 shares of common stock for $4.50 per share, with plans to use the proceeds to acquire ETH for its treasury operations. We suspect this divergent performance reflects BMNR’s smaller size, prominent backers, and relatively large fundraise, which could make it a more compelling and straightforward pure-play ETH treasury play in the eyes of investors. Ethereum’s blockchain itself also saw meaningful inflows in June, adding ~$5.1B in net digital assets. Nearly all of these new assets ( ~$5.0B ) originated from Coinbase’s Base L2, even as Base’s monthly DEX volumes declined ( -13% ). The fading AI-driven activity (e.g., VIRTUAL -26% ) likely drove this decline. 34% of Ethereum Transactions Involved Stablecoins in June, Driving Network Activity Near All-Time Highs Source: Glassnode as of 6/30/2025. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein. While perhaps defensive by crypto standards, this rotation into the L1 may not be bearish. Instead, it suggests that on-chain traders, primarily retail, are aligning with institutional investors’ renewed interest in Ethereum’s base layer. In June, stablecoins experienced a breakout moment following Circle’s IPO and the GENIUS Act’s advancement towards the House, with daily transactions rising (+7%) month-over-month and (+27%) year-over-year. Of the $125B in total stablecoin supply, Ethereum L1 hosts the majority (51%) and settles over ( 58%) of all stablecoin transaction volume ( 29% on ETH L1, 25% on Base, and 4% across Arbitrum, Mantle, and OP Mainnet). Meanwhile, Ethereum-native DeFi tokens such as Maple Finance ([[SYRUP]] +61% ), Sky ([[SKY]] +22% ), Uniswap ([[UNI]] +17 %), and Aave ([[AAVE]] +9% ) were among June’s top-performing tokens, underscoring how Ethereum’s legacy protocols are benefitting from real-world, stablecoin-driven financial applications. Accordingly, we believe the all-time high in NFT transfers on Ethereum is being driven not by JPEG art speculation, but by emergent use cases like tokenized real-world assets, digital identifiers, and on-chain debt instruments. Links to third party websites are provided as a convenience and the inclusion of such links does not imply any endorsement, approval, investigation, verification or monitoring by us of any content or information contained within or accessible from the linked sites. By clicking on the link to a non-VanEck webpage, you acknowledge that you are entering a third-party website subject to its own terms and conditions. VanEck disclaims responsibility for content, legality of access or suitability of the third-party websites. Discloures Index Definitions S&P 500 Index: is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and covers approximately 80% of available market capitalization. Nasdaq 100 Index: is comprised of 100 of the largest and most innovative non-financial companies listed on the Nasdaq Stock Market based on market capitalization. MarketVector Centralized Exchanges Index: designed to track the performance of assets classified as 'Centralized Exchanges'. MarketVector Decentralized Finance Leaders Index: designed to track the performance of the largest and most liquid decentralized financial assets, and is an investable subset of MarketVector Decentralized Finance Index. MarketVector Media & Entertainment Leaders Index: designed to track the performance of the largest and most liquid media & entertainment assets, and is an investable subset of MarketVector Media & Entertainment Index. MarketVector Smart Contract Leaders Index: designed to track the performance of the largest and most liquid smart contract assets, and is an investable subset of MarketVector Smart Contract Index. MarketVector Infrastructure Application Leaders Index: designed to track the performance of the largest and most liquid infrastructure application assets, and is an investable subset of MarketVector Infrastructure Application Index. MarketVector Digital Assets 100 Large-Cap Index: market cap-weighted index which tracks the performance of the 20 largest digital assets in The MarketVector Digital Assets 100 Index. MarketVector Digital Assets 100 Small-Cap Index: market cap-weighted index which tracks the performance of the 50 smallest digital assets in The MarketVector Digital Assets 100 Index. MarketVector Meme Coin Index: modified market cap-weighted index which tracks the performance of the 6 largest meme coins. Meme coin refers to crypto assets often named after characters, individuals, animals, artworks, or other memetic elements. Initially supported by enthusiastic online traders and communities, these coins are intended for entertainment purposes. Coin Definitions Bitcoin (BTC): A decentralized digital currency enabling peer-to-peer transactions without intermediaries or a central authority. Ethereum (ETH): A decentralized platform that enables smart contracts and decentralized applications (dApp S ) using its native token, Ether. Solana (SOL): A high-performance blockchain using Proof-of-History and Proof-of-Stake to support fast, low-cost dApps and decentralized finance. BNB (BNB): The native token of the BNB Chain ecosystem (formerly Binance Smart Chain), used for gas fees, staking, and DeFi applications. Avalanche (AVAX): A highly scalable smart contract platform designed for speed and low fees, supporting custom subnets and DeFi applications. Cardano (ADA): A proof-of-stake blockchain emphasizing academic research and peer-reviewed development; used for dApps and token issuance. Polkadot (DOT): A multichain network that enables interoperability between blockchains via parachains and a central relay chain. Tron (TRX): A blockchain platform focusing on digital entertainment and content sharing, enabling low-cost transactions and USDT transfers. Toncoin (TON): A layer-1 blockchain originally developed by Telegram, optimized for scalability, speed, and integration with the messaging app. Sui (SUI): A high-throughput, low-latency Layer 1 blockchain designed for parallel transaction execution and on-chain asset management. Near Protocol (NEAR): A Layer 1 blockchain with a sharded architecture designed for developer-friendly applications, recently pivoting toward AI and intent-based trading. Hedera (HBAR): A proof-of-stake network using a unique hashgraph consensus algorithm, focused on enterprise-grade decentralized applications. Mantle (MNT): A modular Ethereum Layer-2 solution using Optimistic Rollups and Alt-DA to improve scalability and cost-efficiency. Base: A Coinbase-backed Ethereum Layer-2 using Optimistic Rollups to offer fast, low-cost transactions within a regulated environment. Scroll: An Ethereum Layer-2 network utilizing zk-rollups for enhanced security, scalability, and faster transaction speeds. EigenDA: A decentralized data availability layer leveraging Ethereum validators to offer scalable, modular rollup infrastructure. Celestia (TIA): A modular blockchain focused on providing decentralized data availability for Layer-2 rollups and other chains. Uniswap (UNI): A leading decentralized exchange (DEX) on Ethereum that uses an automated market maker (AMM) model for permissionless token swaps. Risk Considerations This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees. Index performance is not representative of fund performance. It is not possible to invest directly in an index. In vestments in digital assets and Web3 companies are highly speculative and involve a high degree of risk. These risks include, but are not limited to: the technology is new and many of its uses may be untested; intense competition; slow adoption rates and the potential for product obsolescence; volatility and limited liquidity, including but not limited to, inability to liquidate a position; loss or destruction of key(s) to access accounts or the blockchain; reliance on digital wallets; reliance on unregulated markets and exchanges; reliance on the internet; cybersecurity risks; and the lack of regulation and the potential for new laws and regulation that may be difficult to predict. Moreover, the extent to which Web3 companies or digital assets utilize blockchain technology may vary, and it is possible that even widespread adoption of blockchain technology may not result in a material increase in the value of such companies or digital assets. Digital asset prices are highly volatile, and the value of digital assets, and Web3 companies, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment. Digital assets are not generally backed or supported by any government or central bank and are not covered by FDIC or SIPC insurance. Accounts at digital asset custodians and exchanges are not protected by SPIC and are not FDIC insured. Furthermore, markets and exchanges for digital assets are not regulated with the same controls or customer protections available in traditional equity, option, futures, or foreign exchange investing. Digital assets include, but are not limited to, cryptocurrencies, tokens, NFTs, assets stored or created using blockchain technology, and other Web3 products. Web3 companies include but are not limited to, companies that involve the development, innovation, and/or utilization of blockchain, digital assets, or crypto technologies. All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance. © Van Eck Associates Corporation. Original Post Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

2025-07-04 16:30

Summary Circle's USDC stablecoin is uniquely positioned, gaining traction with major partners like Shopify, Walmart, and Amazon for payments and loyalty programs. The company’s revenue model is robust, earning nearly all income from interest on USDC reserves invested in short-term U.S. Treasuries. Regulatory clarity from the Genius Act boosts Circle’s credibility and growth prospects, mandating strict reserve and audit requirements for stablecoins. Despite all this, valuation does not provide a margin of safety for investment. Investment Thesis I recommend selling Circle ( CRCL ) shares. The company's stock has performed incredibly well since its IPO on June 5, and despite its extremely interesting and disruptive business model, I have doubts about the attractiveness of the investment. Even using relatively optimistic assumptions, the valuation through the five-year DCF model indicates a significant downside. In my view, this asset should be on a watch list to monitor possible price drops. Corporate Profile Circle was founded in 2013 by Jeremy Allaire and Sean Neville and initially focused on peer-to-peer payments before moving into stablecoins. Circle is the issuer of the USDC stablecoin , which is already the second-largest dollar-backed stablecoin in the world, with a 30% market share and competing with Tether, the issuer of the USDT stablecoin . Total Stablecoin Market Cap (USDT, USDC, DAI, FDUSD) (Coinglass) The company's ability to integrate with traditional financial systems in a scalable way has attracted the attention of traditional payment networks and institutional investors. But after all, how does the company make money? In short, when an investor wants to buy a unit of USDC, they send $1 to Circle. The company invests this dollar in short-term U.S. government bonds, T-Bills, which yield interest. In 2024, the company reported revenues of $1.68 billion, 99% of which came from interest backed by USDC. How the company makes money (W Fintechs) IPO This has allowed the company to move beyond the cryptocurrency space and launch an IPO. The company's IPO took place on June 5, 2025, and was a milestone for the industry, with a meteoric performance in the first few days of trading. The company's shares went from $31 per share to $270 in a few days. Let's now analyze the reasons behind such optimism. Price Return (SA) First Reason - Applications Can Reshape The Sector One of the catalysts for the good performance is that the company has managed to position USDC in a very unique way. Circle is developing, through partnerships with payment processors such as Fiserv , a solution for enabling stablecoins in financial institutions. Shopify has launched USDC payments recently. Walmart and Amazon are testing stablecoin-based systems for ATMs and loyalty programs. If these projects are successful, USDC could be a core payments infrastructure. The benefits will cascade, such as reduced transaction costs and increased operational efficiency. Second Reason - Expansion Includes Corporate Treasury Market The bold growth strategy also targets the institutional client . Stablecoin solutions can automate complex financial transactions, as well as provide liquidity management tools, cross-border capital flows and automated payments. Third Reason - The Impact of Genius Act The U.S. Senate has passed the Genius Act , which represents a broader effort to regulate the stablecoin space. The legislation specifically requires each stablecoin to be backed 1:1 by dollars or liquid assets, with mandatory reserve disclosure and audits. Non-financial companies are prohibited from issuing digital currencies, and it protects consumers with strict rules. The Genius Act also favors T-Bills , as Tether and Circle invest heavily in these securities to maintain parity with the dollar. Stablecoins represent an estimated 3% of the T-Bills market, and demand could grow exponentially. Financial Analysis According to Bernstein , increased adoption and supply of USDC should drive Circle's revenue to grow at a CAGR of 47% between 2024 and 2027, which is in line with the consensus . Due to the proximity of the projections, I will use them in the valuation discussion ahead. Consensus Revenue Estimate (SA) Adjusted EBITDA is expected to grow at a CAGR of 71% over the same period. Circle is expected to maintain a 30% market share in the stablecoin market. As of now, USDC holds around 25% market share in the stablecoin market. With this information in hand, we will analyze the valuation. Valuation For the valuation, I used a five-year DCF model using a revenue exit multiple. In my view, it is the best method to evaluate companies with strong growth and in transition to profitability. I adopted assumptions aligned with the SA consensus and Bernstein. I projected a CAGR of 42% for revenue between 2024 and 2029, and an EBITDA margin going from 10.5% to 26.2%. I reduced the CAGR from 47% to 42% because I will be making a five-year projection and not a 3-year projection, allowing for a more conservative view. The WACC used was 10.5%, reflecting the risk of a company in a volatile sector. The terminal multiple was 4.8x revenue, consistent with rapidly expanding fintechs in my view. 5Y DCF Revenue Exit (The Author) The result points to a fair value of $141.79, a downside of 26.4% compared to the current price of $188.77. In my view, despite the interesting thesis and expressive growth, the market is overestimating the business' potential. Based on this analysis, I recommend selling Circle shares. We should also remember that the business is sensitive to interest rates. I would like to point out that a catalyst for the shares to return to fair value could be the beginning of an interest rate cut by the Federal Reserve. The company itself has already indicated that a 1% drop in interest rates would reduce revenue by up to $441 million . Potential Threats To The Thesis As risks to the bearish thesis, we are disregarding any business diversification. Currently, a major risk is the excessive concentration of revenue, if the company manages to diversify into even more promising businesses, the thesis changes completely. Unlike Tether, which is not a publicly traded company, Circle offers greater transparency, especially in the stablecoin environment regulated by the Genius Act, which can be a differentiator for investors. The stock's momentum is very strong, and we have the famous FOMO , or fear of missing out. This behavioral bias can make investors buy the company's shares and drive prices higher and higher. Finally, in the last 12 months, a basket of unprofitable tech companies outperformed the S&P 500, possibly reflecting the FOMO mentioned above. The thesis is complex and investors should analyze it carefully. Low-Quality Baskets Show Significant Outperformance (Bloomberg) The Bottom Line Circle is the only publicly traded company with a business model that is 100% responsive to the stablecoin environment. The company's disruption and potential can be seen in its stock performance after the IPO. However, the main quality of an investor should be to acquire shares of companies that offer a good risk-reward ratio. In this sense, the five-year DCF model indicates a significant downside of 26.4%. Based on this analysis, I recommend selling Circle shares. Nonetheless, I suggest that the investor put the company's shares on a watch list, as a sharp drop in the shares could provide an attractive entry point.

2025-07-04 15:04