Analyzing the coin-stock flywheel: the underlying logic you need to know before buying coin stocks

In the financial innovation frontier of 2025, a powerful and controversial mechanism is stirring up waves in the capital markets - the "Crypto-Stock Flywheel" - a closed-loop system where listed companies drive their stock value reassessment through massive crypto holdings. With the popularization of Bitcoin ETFs and digital assets gradually penetrating mainstream vision, this model presents an unprecedented and peculiar landscape between Wall Street and the emerging crypto world: some companies are ambitiously working to build a magnificent bridge connecting traditional finance and the digital future, while others are carefully staging a capital illusion aimed at creating liquidity out of thin air, luring investors eager to catch the wealth express. These two paths, although superficially adopting the "listed company + cryptocurrency" structure, have vastly different underlying philosophies, strategic intentions, asset targets, risk exposures, and ultimate destinations. For investors caught in this transformation vortex, discerning the profound differences is not only key to understanding the current deep game between crypto and capital markets but also a necessary compass to defend one's wealth and clarify investment direction. [The rest of the translation follows the same professional and accurate approach, maintaining the original text's tone and technical nuances while translating into English.]

1. Step One: Finding the "Shell". Choose a listed company with small market capitalization, dispersed equity, and easy to manipulate as a "shell" or "container" for capital operations. Such companies usually have stagnant business but retain their listed status, making them a perfect operating platform.
2. Step Two: Injecting the "Narrative". Leverage market enthusiasm for specific concepts (such as MEME coins, AI, metaverse) and powerful narrative capabilities to package a low-liquidity, hard-to-value Altcoin as a "strategic core asset".
3. Step Three: Left Hand to Right Hand, Artificially Increasing Assets. Internal personnel or their affiliates "sell" a massive amount of Altcoins to the listed company at a "fair price". This transaction is usually non-cash, exchanging for company equity or acceptance notes. This step is crucial, instantly "beautifying" the company's balance sheet, making a previously empty shell company suddenly have millions or even hundreds of millions of dollars of "digital assets" out of thin air. This is a classic self-circulation, where value growth does not come from external sources, but from internal manipulation.
4. Step Four: Igniting Public Opinion, Boosting Stock Price. Through intensive media public relations and social media KOL promotions, continuously emphasize its "strategic transformation" and "asset value" to attract uninformed retail investors, pushing the company's stock price to high levels.
5. Step Five: Additional Issuance and Fundraising, Completing the Harvest. After the stock price is hyped up, using the high market sentiment, announce a stock secondary offering or convertible bond issuance to raise real money from secondary market public investors. This is the ultimate goal of the entire fraud - extracting cash invested by shareholders to cash out early-stage coin holding costs.

The ultimate outcome of this illusion is almost predetermined: after completing the cash-out, the operators quietly leave, leaving behind a company with overvalued (or even false) assets, severely dragged down by Altcoins, cash diluted by fundraising, and stock price plummeting. The entire game merely exploits the information barriers and cognitive differences between crypto and stock markets, falsely pricing non-liquid assets in one end (crypto), and then harvesting investors who trust "official announcements" and "wealth stories" on the other end (stock market).

Conclusion: Identifying the Real Fuel of the Engine, Penetrating the Capital Fog

The "Coin-Stock Flywheel" as a powerful capital market tool, is inherently neither good nor evil. It is a double-edged sword that can be used to build value bridges to the future or construct sophisticated traps to capture ordinary investors. Its nature entirely depends on its core design and the ultimate intent of its operators.

When its engine is driven by a top-tier digital asset like Bit that has withstood multiple cycle tests, possessing the most extensive global liquidity and value consensus, and piloted by a professional team with long-term strategic vision and strong capital strength, it can become an efficient, stable, and value-creating financial instrument. In essence, it provides a regulated ticket for massive capital from the old world to enter the new world.

However, when its engine is quietly replaced by an unknown, weak-community, and low-liquidity Altcoin, with its so-called "fuel" coming from information asymmetry and malicious manipulation of market sentiment against public investors, it will inevitably become a cold and efficient cash-out machine serving only a few insiders.

Therefore, for market participants, learning to distinguish between these two completely different paths is the core skill for survival and development in this grand interplay of capital and technology. You need to examine and interrogate like a financial detective:

• What is the core of the asset? Is the core asset of this flywheel a solid digital foundation like Bit, or an ethereal valuation that could go to zero at any moment?
• Where does the driving force come from? Is it driven by patient capital from large institutions and professional investors, or merely dependent on short-lived retail enthusiasm from social media?
• Where is the capital flowing? Are the company's fundraising purposes to continuously and transparently acquire core assets, or flowing to opaque related-party transactions or paying high "consulting fees"?
• What is the management's background? Is the operating team long-term successful value investors, or notorious "storytellers" in the capital market?

Only by seeing the true engine and fuel beneath the flywheel can you discern the real value ark in this capital great maritime era full of opportunities and traps, avoid ghost ships decorated with illusions, and find your true course.