Over the years, we've had numerous people speak on how much of crypto’s markets is in a bubble. The rationale behind this has often been that crypto assets derive their value from speculations without meaningful economic backings.
Of course, the phrasing of these arguments differ from time to time, but the underlying message often remains the same. Critics have always said that Bitcoin has no intrinsic value and generally that decentralized assets and associated solutions hold no braod economic value.
The reality, however, is that this is all a false assessment of our ecosystem, unsurprisingly based on ignorance and the hate of the power transfer that follows the potential transitions and adoption of blockchain solutions over current traditional offerings.
That said, in an interesting turn of events, an alternative market, to which the concept of market bubbles was born off of, might actually be on a trend near criminally over-valued levels.
Remember that critics formerly claimed that cryptocurrencies like Bitcoin have no intrinsic, yet now they are found making significant investments into the very same market and in their words, this move is aimed at gaining “meaningful economic exposure” to the growing digital assets ecosystem.
SharpLink buys $463M in ETH, becomes largest public ETH holder
Sports betting platform SharpLink Gaming has acquired 176,271 Ether for $463 million, becoming the world’s largest publicly traded holder of ETH.
In a Friday announcement, the Nasdaq-listed company said the Ether(ETH) acquisition was funded through a combination of private placement and at-the-market equity sales, including $79 million raised since May 30. The average acquisition price came in at $2,626 per coin.
The company said over 95% of its ETH is now deployed in staking and liquid staking platforms, earning yield while contributing to Ethereum’s network security.
“This is a landmark moment for SharpLink and for public company adoption of digital assets,” said Rob Phythian, CEO of SharpLink Gaming, adding that the company now treats ETH as its “primary treasury reserve asset.”
SharpLink (SBET) is the first Nasdaq-listed firm to adopt an ETH-based treasury model, aiming to offer shareholders “meaningful economic exposure to ETH,” the company said. — Cointelegraph report
Some things to note:
— A sports platform invests almost half a billion into a crypto asset.
— Goes ahead to call the crypto asset it's “primary treasury asset,” which translates to: this is how and where we store the value of our income.
— Also goes right on to stake said asset, effectively maximizing income through yield, whilst also contributing to the economic expansion and security of the network.
— Calls its investment a “meaningful economic exposure.”
And lastly, cited in an alternative report, the stock of said company had surged over 400% at the announcement of ETH treasury on May 27th.
According to the announcement, SharpLink Gaming, a publicly traded company on Nasdaq, entered into a securities purchase agreement for a private investment in public equity worth $425 million. Ethereum infrastructure firm Consensys was among the investors.
SharpLink Gaming’s stock is up approximately 400% at the time of writing, changing hands at nearly $33.50. Trading today started at over $30 after closing under $7 the day before. — Cointelegraph report
What does this mean for the stock markets?
To risk now sounding like the no-coiners previously shitting on crypto innovations and calling the markets a bubble, I'm tempted to say that stocks may enter bubble territory.
The rationale with this one is that stocks are very different from crypto, and it's to be understood that when traditional companies make investments into crypto assets, the general goal is likely to approach it as a product or service investment.
In essence, this means that said investments are in no way a direct liquidity to the stock of the company making the move, so any wide rally in associated stocks are purely speculative and very much risky as a rally in the invested crypto asset provides no direct liquidity nor value push to the stock of the company or companies involved.
Traditional companies and institutions are making huge bets and well, gamblers are trading the hype. Certainly, sometimes it could just market manipulation, but at the end of the day, the same results is to be expected.
It's unlikely that stocks of companies will mirror the growth of treasury assets, but even if it did, it would have probably rekt a ton of traders in the process.
A nearly half a billion investment into one of the worst performing assets in crypto isn't a reason for a stock to rally 400%, that's an over-valuation of the event in real time and at some point will have to be corrected.
Funny enough, when it comes to Sharplink Gaming Inc, that has already happened based on data from Google finance showing that the company's stock has crashed -71.69% in the last 24hrs to $9.21 at the time of writing.
More of similar market activities are to be expected as more traditional companies move to gain crypto exposure.