Coin-Stock Synergy: Igniting the Crypto Cycle

As 2025 progresses into its latter half, the global financial landscape is being redefined by fundamental economic forces. The previous decade saw asset values largely shaped by readily available money, global teamwork, and advancements in technology. However, these pillars are now shifting, causing a significant change in how capital markets operate. Cryptocurrencies, often seen as a leading indicator of global monetary conditions and risk tolerance, are now experiencing price movements, investment patterns, and portfolio allocations influenced by emerging factors. The main drivers are persistent long-term inflation, a decrease in the strength of the U.S. dollar’s financial influence, and varying approaches to capital investment across different nations.

Firstly, inflation is no longer a temporary concern easily addressed; it’s becoming increasingly entrenched. In developed nations, particularly the United States, core inflation rates have consistently exceeded 3%, surpassing the Federal Reserve’s 2% target. This isn’t simply due to an increase in the money supply; instead, it’s driven by structural cost pressures that are reinforcing themselves. While energy costs have stabilized, significant investments in artificial intelligence and automation, rising prices of rare metals needed for green energy, and higher labor costs resulting from shifts in manufacturing are all contributing to ongoing inflation. Recent announcements from the Trump administration indicate that high tariffs on industrial and technological goods from countries like China, Mexico, and Vietnam will be reinstated. This not only continues geopolitical tensions but also suggests that the U.S. government considers inflation a tolerable “strategic expense.” Consequently, U.S. businesses will face higher costs for materials and components, leading to further price increases for consumers and creating a “policy-driven cost inflation” scenario. This differs from traditional overheating inflation, being instead deeply embedded due to policy decisions. Its lasting impact on asset valuation will be more pronounced than in 2022.

Secondly, due to ongoing high inflation, the Federal Reserve is unlikely to lower interest rates quickly, expecting them to stay above 5% until at least mid-2026. This puts downward pressure on traditional stock and bond markets: bond yields are inverted, harming long-term investments, and stock valuations are negatively impacted. In contrast, cryptocurrencies, particularly Bitcoin and Ethereum, are valued more on “growth potential, scarcity, and community support,” making them less affected by traditional interest rate controls. Instead, high interest rates can actually boost their appeal because of their limited supply and decentralized nature, creating a “reverse monetary cycle” effect. This allows Bitcoin to evolve from a highly volatile speculative asset into a more stable alternative store of value.

Moreover, the U.S. dollar’s dominant position in the global economy is weakening. The U.S. government’s debt continues to grow, exceeding $2.1 trillion in the second quarter of 2025, an 18% increase year-over-year, marking a record high. Simultaneously, the U.S.’s role as the primary global settlement currency is being challenged. Countries like Saudi Arabia, the UAE, and India are actively promoting the use of their own currencies for trade, including cross-border payment systems like the Renminbi-Dhirham and Rupee-Dinar, which are starting to replace some dollar transactions. This shift is driven not only by the negative effects of U.S. monetary policies on other economies but also by these countries’ efforts to reduce reliance on a single currency. In this climate, digital assets offer a neutral, programmable, and independent alternative. For example, stablecoins like USDC and DAI are increasingly used in over-the-counter (OTC) trading and business-to-business (B2B) cross-border payments in African and Asian markets, acting as a digital extension of an “underground dollar system” in developing countries. Bitcoin is becoming a tool for moving capital and protecting against local currency devaluation. In countries like Argentina, Nigeria, and Turkey, Bitcoin’s purchasing power is more than 15% higher, reflecting real demand for protection against financial instability.

Importantly, as de-dollarization accelerates, the U.S. dollar’s internal financial system is also showing signs of weakness. In June 2025, Moody’s and Fitch both lowered their outlook for the U.S. long-term sovereign credit rating to “negative,” mainly citing unsustainable government debt and political division affecting budget management. These warnings from rating agencies caused increased instability in the U.S. Treasury market, leading investors to seek safer alternative investments. Purchases of gold and Bitcoin exchange-traded funds (ETFs) increased significantly, indicating a shift of institutional funds towards assets not controlled by any single nation. This reflects a desire to diversify away from traditional assets and find alternative safe havens as U.S. stocks and bonds become increasingly overvalued.

Finally, different approaches to capital flows around the world are reshaping the asset market. Within the traditional financial system, stricter regulations, valuation challenges, and rising compliance costs are limiting the growth potential of institutional investments. In the cryptocurrency market, influenced by the easing of ETF approvals and audit processes, cryptocurrencies are increasingly being accepted as legitimate investments. In the first half of 2025, the U.S. Securities and Exchange Commission (SEC) approved the launch of ETFs focused on SOL, ETH, and AI-related cryptocurrencies, directing funds into the blockchain space through financial channels, and altering the distribution of investments across different assets. This is driven by the growing influence of institutional frameworks over investment strategies.

Therefore, a clear trend is emerging: changes in traditional economic factors—including persistent inflation, a weakening dollar, long-term high interest rates, and policy-driven shifts in global capital—are creating a new era of asset valuation. In this era, stores of value, financial boundaries, and risk assessment are being redefined. Cryptocurrencies, particularly Bitcoin and Ethereum, are moving from a period of speculative growth to one of institutional acceptance, benefiting directly from the evolving financial system. This provides a framework for understanding how asset prices will move in the coming years. For investors, understanding these shifts is more important than short-term market predictions; future investment strategies will reflect not just risk tolerance but also a deep understanding of institutional signals, monetary structures, and the global value system.

A major structural change in the 2025 crypto market is the rise of the “coin-stock strategy.” Starting with MicroStrategy’s use of Bitcoin as a corporate reserve asset, more and more public companies are disclosing their cryptocurrency allocations. This model is becoming a corporate strategy with embedded institutional support, not just a financial decision. The coin-stock strategy opens a channel between capital markets and blockchain assets, creating new approaches to financial reporting, stock valuation, financing structures, and overall valuation. Its spread and impact are significantly reshaping how cryptocurrencies are funded and valued.

Historically, MicroStrategy’s Bitcoin strategy was considered a high-risk gamble, especially during the cryptocurrency market downturn of 2022-2023, when the company’s stock price faced criticism. However, in 2024, as Bitcoin’s price reached new highs, MicroStrategy successfully rebuilt its financing and valuation model through a structured “coin-stock linkage” strategy. This strategy is driven by a three-part mechanism: first, the “stock-coin resonance” mechanism, where the company’s Bitcoin holdings increase the net value of its cryptocurrency assets on its financial statements, boosting its stock price and lowering financing costs; second, the “stock-debt synergy” mechanism, which uses convertible bonds and preferred stocks to diversify funding while leveraging Bitcoin’s market premium to reduce overall financing costs; and third, the “coin-debt arbitrage” mechanism, which combines traditional debt with the appreciation potential of cryptocurrencies, allowing for capital transfers over time. After MicroStrategy successfully validated this mechanism, it was quickly adopted and adapted by the capital market.

By 2025, the coin-stock strategy is no longer limited to individual companies but has spread to a wider range of public companies as a financial structure that combines strategic and accounting advantages. According to available data, by the end of July, over 35 public companies globally had included Bitcoin on their balance sheets, with 13 also allocating ETH and 5 experimenting with other major altcoins like SOL, AVAX, and FET. This strategy allows companies to create a financing loop through capital market mechanisms while also increasing their book value and shareholder expectations through cryptocurrency assets, leading to higher valuations and stock expansion.

This trend is supported by changes in the institutional environment. The “GENIUS Act” and “CLARITY Act,” which took effect in July 2025, provide clear compliance pathways for public companies to allocate cryptocurrency assets. The “CLARITY Act” establishes a “mature blockchain system” certification mechanism that categorizes major cryptocurrencies like Bitcoin and Ethereum as commodities, removing the SEC’s regulatory authority over them as securities. This provides legal legitimacy for companies to include these assets in their financial reports. This means that public companies no longer need to classify their cryptocurrency assets as “financial derivatives” but can account for them as “digital commodities” under long-term assets or cash equivalents, and even participate in depreciation or impairment calculations, reducing accounting volatility risks. This shift allows cryptocurrency assets to be listed alongside traditional reserve assets like gold and foreign currency reserves, entering the mainstream financial reporting system.

From a capital structure perspective, the coin-stock strategy creates unprecedented financing flexibility. In a high-interest-rate environment set by the Federal Reserve, traditional corporate financing costs remain high, making it difficult for small and medium-sized growth companies to expand through low-cost debt. However, companies allocating cryptocurrency assets can leverage the valuation premium from rising stock prices to obtain higher sales and book value ratios (PS and PB) in the capital market. They can also use their cryptocurrency assets as collateral to participate in on-chain lending, derivative hedging, and cross-chain asset securitization, creating a dual-track financing system: on-chain assets provide flexibility and yield, while off-chain capital markets provide scale and stability. This system is particularly suitable for Web3 native enterprises and fintech companies, giving them greater capital structure freedom within a compliance framework.

The coin-stock strategy has also shifted investor behavior. After cryptocurrency assets are widely allocated on public company balance sheets, the market begins to reprice the valuation models of these companies. Traditionally, corporate valuations are based on profitability, cash flow expectations, and market share. However, when large-scale cryptocurrency holdings appear in corporate financial reports, their stock prices begin to correlate closely with cryptocurrency prices. For example, the stock prices of companies like MicroStrategy, Coinbase, and Hut8 have significantly outperformed industry averages during Bitcoin’s upward cycles, demonstrating a strong premium for the “cryptocurrency content” of their assets. Increasingly, hedge funds and structured products are viewing these “high-cryptocurrency-weight” stocks as alternatives to ETFs or proxies for cryptocurrency exposure, increasing their allocation weight in traditional investment portfolios. This promotes the financialization of cryptocurrency assets, allowing Bitcoin and Ethereum to gain indirect circulation channels and derivative pricing functions in the capital market.

From a regulatory strategic perspective, the spread of the coin-stock strategy is seen as a tool for the U.S. to maintain its “dollar influence” in the global financial order. Amid the surge in central bank digital currency (CBDC) pilot projects, the expansion of Renminbi cross-border settlement, and the European Central Bank’s push for digital euro testing, the U.S. government has not actively launched a federal-level CBDC but has chosen to shape a decentralized dollar network through stablecoin policies and a “regulatable cryptocurrency market.” This strategy requires compliant, high-frequency market entry with substantial funding capabilities, and public companies, as bridges connecting on-chain assets and traditional finance, are fulfilling this function. Thus, the coin-stock strategy can be understood as institutional support for the U.S. financial strategy of using “non-sovereign digital currencies to replace dollar circulation.” From this perspective, public companies allocating cryptocurrency assets are not merely making accounting decisions but participating in a national-level financial architecture adjustment.

The more profound impact is the global spread of these capital structures. As more U.S. public companies adopt the coin-stock strategy, listed companies in the Asia-Pacific, Europe, and emerging markets are also beginning to follow suit, attempting to secure compliance space through regional regulatory frameworks. Countries like Singapore, the UAE, and Switzerland are actively revising securities laws, accounting standards, and tax mechanisms to open institutional pathways for their domestic companies to allocate cryptocurrency assets, creating a competitive landscape for cryptocurrency acceptance in global capital markets. The institutionalization, standardization, and globalization of the coin-stock strategy will be important evolutionary directions for corporate financial strategies in the next three years and will serve as a key bridge for the deep integration of cryptocurrency assets and traditional finance.

In summary, from MicroStrategy’s initial efforts to the strategic spread among multiple public companies, and then to the normative evolution at the institutional level, the coin-stock strategy has become a key channel connecting on-chain value and traditional capital markets. It is not only an update of asset allocation logic but also a reconstruction of corporate financing structures, and a result of the interaction between institutions and capital. In this process, cryptocurrency assets have gained broader market acceptance and institutional security, completing a structural leap from speculative assets to strategic assets. For the entire cryptocurrency industry, the rise of the coin-stock strategy signifies the start of a new cycle: cryptocurrency assets are no longer merely on-chain experiments but have truly entered the core of global balance sheets.

In 2025, the global cryptocurrency asset market stands at a pivotal moment, with institutionalization accelerating. Over the past decade, the focus of the cryptocurrency industry has shifted from “innovation outpacing regulation” to “compliance frameworks driving industry growth.” As we enter the current cycle, regulation’s role has evolved from “enforcer” to “institutional designer” and “market guide,” reflecting a new understanding of how national governance systems influence cryptocurrency assets. With the approval of Bitcoin ETFs, the implementation of stablecoin legislation, accounting standard reforms, and the reshaping of capital market risk and value assessments for digital assets, compliance is no longer just external pressure but an internal driving force for financial structure transformation. Cryptocurrency assets are gradually embedding into the institutional network of mainstream financial systems, transitioning from “unregulated financial innovation” to “compliant financial components.”

The core of this institutionalization is first reflected in the clarification and relaxation of regulatory frameworks. From the end of 2024 to mid-2025, the U.S. passed the “CLARITY Act,” “GENIUS Act,” and “FIT for the 21st Century Act,” providing clarity on commodity classification, token issuance conditions, stablecoin custody requirements, KYC/AML details, and accounting standard boundaries. The “commodity attribute” classification system is particularly impactful, categorizing foundational blockchain assets like Bitcoin and Ethereum as tradable commodities, excluding them from securities law regulation. This provides a legal basis for ETFs and spot markets and creates a compliance pathway for institutions like companies, funds, and banks to include cryptocurrency assets. This “legal label” is the first step toward institutionalization, laying the groundwork for subsequent tax treatment, custody standards, and financial product structure design.

Major global financial centers are competing to promote localized institutional reform, transforming “regulatory havens” into “regulatory leaders.” Singapore’s MAS and Hong Kong’s Monetary Authority have introduced multi-tiered licensing systems, incorporating exchanges, custodians, brokers, market makers, and asset managers into differentiated regulatory frameworks, establishing clear thresholds for institutional entry. Abu Dhabi, Switzerland, and the UK are also piloting on-chain securities, digital bonds, and combinable financial products at the capital market level, ensuring that cryptocurrency assets not only exist as an asset class but are evolving into fundamental elements of financial infrastructure. This “policy experimentation” safeguards innovation while promoting the digital transformation of the global financial governance system, providing new pathways for institutional upgrades and collaborative development in traditional finance.

Driven by institutional changes, the internal logic of financial structures is also undergoing profound changes. First, asset categories are being reconstructed, with the proportion of cryptocurrency assets in large asset management institutions’ allocation strategies increasing year by year, rising from less than 0.3% of global institutional allocations in 2022 to over 1.2% in 2025, with expectations to exceed 3% in 2026. While this proportion may seem low, the marginal flow it represents within a multi-trillion-dollar asset pool can significantly alter the liquidity and stability structure of the entire cryptocurrency market. Institutions like BlackRock, Fidelity, and Blackstone are launching BTC and ETH-related ETFs and incorporating cryptocurrency assets into core asset allocation baskets through proprietary funds, fund of funds (FOF) products, and structured notes, establishing their roles as risk hedging tools and growth engines.

Second, financial products are becoming standardized and diversified. Previously, cryptocurrency asset trading was limited to spot and perpetual contracts, but compliance promotion has led to the rapid development of various product forms embedded in traditional financial structures. Examples include cryptocurrency ETFs with volatility protection, bond-type products linked to stablecoin interest rates, ESG asset indices driven by on-chain data, and on-chain securitized funds with real-time settlement functions. These innovations enhance the risk management capabilities of cryptocurrency assets and lower the participation threshold for institutions through standardized packaging, allowing traditional funds to effectively engage in on-chain markets through compliant channels.

The third layer of financial structure transformation is reflected in clearing and custody models. Starting in 2025, the U.S. SEC and CFTC jointly recognized three “compliant on-chain custody” institutions, marking the formal establishment of a bridge between asset ownership, custody responsibilities, and legal accounting entities for on-chain assets. Compared to previous models based on centralized exchange wallets or cold wallet custody, compliant chain custody institutions achieve asset layered ownership, transaction permission isolation, and embedded on-chain risk control rules through verifiable technology, providing institutional investors with risk control capabilities approaching those of traditional trust banks. This change in the underlying custody structure is a key infrastructure building block for institutionalization, determining whether on-chain finance can support complex structured operations such as cross-border settlements, collateralized lending, and contract settlements.

More importantly, the institutionalization of cryptocurrency assets is not only regulation adapting to the market but also sovereign credit systems attempting to incorporate digital assets into macro-financial governance structures. As stablecoin daily trading volume exceeds $3 trillion and begins to function as payment and settlement in some emerging markets, central banks’ attitudes toward cryptocurrency assets are becoming increasingly complex. On one hand, central banks are promoting CBDC development to strengthen their national currency sovereignty; on the other hand, they are adopting an “open management with neutral custody + strong KYC” approach toward certain compliant stablecoins (such as USDC and PYUSD), allowing them to undertake international settlement and payment clearing functions within certain regulatory scopes. This shift indicates that stablecoins are no longer adversaries of central banks but institutional containers in the process of reconstructing the international monetary system.

This structural change reflects on the “institutional boundaries” of cryptocurrency assets. The market in 2025 is no longer segmented by a discontinuous logic of “cryptocurrency circle – chain circle – outside the circle,” but forms three continuous levels: “on-chain assets – compliant assets – financial assets.” Channels and mapping mechanisms exist between each level, allowing each asset type to enter the mainstream financial market through some institutional pathway. Bitcoin has transitioned from an on-chain native asset to an ETF underlying asset, Ethereum has evolved from a smart contract platform asset to a token for general computing financial protocols, and even governance tokens from certain DeFi protocols have entered FOF fund pools as risk exposure tools after being structurally packaged. This flexible evolution of institutional boundaries allows the definition of “financial assets” to potentially possess cross-chain, cross-national, and cross-institutional systems for the first time.

From a macro perspective, the institutionalization of cryptocurrency assets is the global financial structure’s adaptive response and evolution under digitalization. Unlike the “Bretton Woods system” and “petrodollar system” of the 20th century, the financial structure of the 21st century is being reconstructed with a more distributed, modular, and transparent approach to resource flow and capital pricing. As a key variable in this structural evolution, cryptocurrency assets are manageable, auditable, and taxable digital resources, not outliers. This institutionalization is a systemic evolution of regulatory, market, enterprise, and technological interactions, not a sudden policy change.

Therefore, the institutionalization of cryptocurrency assets will deepen, and three coexisting models will emerge in major global economies in the next three years: one is the “market opening + prudent regulation” model led by the U.S., with ETFs, stablecoins, and DAO governance as institutional axes; another is the “restricted access + policy guidance” model represented by China, Japan, and South Korea, emphasizing central bank control and licensing mechanisms; and the last is the “financial intermediary experimental zone” model represented by Singapore, the UAE, and Switzerland, providing institutional mediation between global capital and on-chain assets. The future of cryptocurrency assets is not a struggle between technology and institutions but an institutional reorganization and absorption of technology.

In July 2025, Ethereum celebrates its tenth anniversary, and the cryptocurrency market has transitioned from early experimentation to institutional recognition. The widespread coin-stock strategy symbolizes the deep integration of traditional finance and cryptocurrency assets.

This cycle is not just market growth but a structural and logical reconstruction: from macro monetary policies to corporate assets, from cryptocurrency infrastructure to financial governance models, cryptocurrency assets have truly entered institutional asset allocation for the first time.

We believe the cryptocurrency market will evolve into a three-pronged structure of “on-chain native yields + compliant financial interfaces + stablecoin-driven” dynamics in the next 2-3 years. The coin-stock strategy is just the beginning; deeper capital integration and governance model evolution are just starting.