Ten years of blockchain: a journey of melting ice in the capital market

In January of this year, Bridgewater, the world’s largest hedge fund, publicly affirmed the growth and value potential of Bitcoin, which caused a stir in the traditional investment community.

Ray Dalio, the founder of Bridgewater, said:

“Bitcoin has withstood the test of 10 years.” Its underlying technology has never been compromised, and it is amazingly superior.

Looking back, the decade of Bitcoin is also the decade of blockchain technology companies trying to embrace the capital market. 

Ten years of blockchain: a journey of melting ice in the capital market

(Picture: Original fragment of Dalio’s “My View on Bitcoin”)

Before dawn

From 2011 to 2017, the first batch of blockchain companies completed the transition from budding to barbaric growth.

With technologies, products, and markets taking shape, and business models gradually becoming clear, the leading companies are complacent and begin to look at listings.

However, at that time, the subversive nature of blockchain technology was concealed by the crazy ICO issuance, which made traditional investors feel confused and confused.

In China, the September Fourth regulatory storm came suddenly, and the confidence that had just been built was dissipated. In the face of major negatives, industry companies have to keep a low profile while trying to find new ways.

The first rays of light appeared in 2018. In just a few months, three companies in mainland China used almost the same method-backdoor listing and indirectly landed on the Hong Kong Stock Exchange:

Ten years of blockchain: a journey of melting ice in the capital market

Share price performance of the three companies in recent years (photo source: Oriental Fortune.com)


From 2019 to 2021, the interaction between blockchain companies and the capital market has entered a new stage.

Mining giants Jianan Zhizhi, Yibang International and the world’s largest Bitcoin exchange Coinbase have successively listed on the Nasdaq, which is one of the landmark events.

Canaan Zhizhi and Yibang International went through ups and downs. After backdooring hopelessly and repeatedly hitting the Hong Kong Stock Exchange, they eventually moved to the U.S. stock market, which is relatively tolerant to mining hardware vendors.

Among the dozens of blockchain companies listed on the U.S. stock market, mining concept stocks dominate four. Being in the upper reaches of the Bitcoin industry chain, strong performance certainty is the common reason why such companies are sought after.

The difference is that among the four companies, Marathon and Riot entered the mining track through the transformation of listed entity business, while Jianan Zhizhi and Yibang International completed the listing through IPO.

This change sends a positive signal: mature capital markets are ready for the IPO and financing of blockchain companies.

In April 2021, Coinbase, dubbed the “most pure” block chain concept stock, stepped on the cusp of the cryptocurrency bull market and appeared on the Nasdaq Global Select Market by way of direct listing (DPO).

Unlike an IPO, a DPO does not need to raise funds at the time of listing. As long as it is approved by the exchange, the company’s stock can be directly circulated in the secondary market.

Choosing the DPO method reflects Coinbase’s strong self-confidence: I am convinced that I can be sufficiently attractive to market investors.

The successful listing of Coinbase reflects from the side that the cold attitude of the traditional capital market towards blockchain companies is rapidly disintegrating.

Ten years of blockchain: a journey of melting ice in the capital market

(Image source: Six Eagle Capital)

In just a few years, the blockchain industry has been able to break the ice in the traditional capital market. There are two main reasons for this.

First of all, mainstream cryptocurrencies , led by Bitcoin, have achieved consolidation in the long-term volatile market. The price of the currency has risen step by step, the investment value has been highlighted, and market confidence has continued to increase.

As can be seen from the above figure, from 2017 to 2019, Bitcoin completed the first round of “surge-retracement-consolidation-upsurge”. Despite the so-called bear market, by the end of 2019, the price of the currency has steadily stood at $7,000.

Beginning in 2020, Bitcoin has gradually ushered in the second wave of skyrocketing. Even if the gains in the past two months have been retreated and the price of the currency has fallen sharply to about 35,000 US dollars, the level of return has still encouraged the market.

The second is the change in the development environment of the industry.

The innovation of blockchain technology is accelerating, the application fields are gradually diversified, and industry investment opportunities are beginning to emerge.

Some companies supported by early venture capital have grown and their value potential and business models have been verified. At the same time, in some regional markets, industry supervision has gradually become standardized and risk levels have been controlled.

Coinbase is a typical sample that has witnessed this change. In less than ten years, it has been transformed from a start-up to a world-class blockchain giant and has become the leader in the end-to-end financial infrastructure and technology of the encrypted economy. Provider.

In terms of scale of operation, its platform serves approximately 43 million individual users and 7,000 institutional customers in more than 100 countries around the world. The company directly participates in the integration of more than 15 blockchain protocols and supports the transaction or custody of more than 90 encrypted assets.

The success of Coinbase is inseparable from capital support. Throughout its financing process, from the private equity stage to the DPO listing, it fully reflects the continuous improvement of the density and quality of interaction between blockchain companies and the capital market (see the figure below).

Ten years of blockchain: a journey of melting ice in the capital market

(Image source: Home of American Stocks)

Looking Forward to Emerging Trends

Since the beginning of this year, the connection between U.S. stock SPAC companies and the blockchain industry has become increasingly close, which has become a significant trend. The link between blockchain companies and capital has opened up new possibilities.

SPAC, the special purpose acquisition company, will explode in 2020. Last year, nearly 500 new stocks were listed in the U.S. market, of which SPAC IPOs accounted for half of the total, with a total of 83.4 billion U.S. dollars.

The only asset of the SPAC at the time of listing is the funds raised from investors at the time of the IPO. After that, the merger and acquisition of companies or assets that meet the investment direction must be completed within the specified time (usually 18-24 months), otherwise the funds must be returned to the investors.

It is worth noting that SPAC requires its sponsors and management team to have a strong professional background and a good reputation record recognized by the US capital market; as the sponsoring team has experts in a certain industry field, the probability of successful mergers in finding entities is higher.

In addition, SPAC sponsors and target companies are a community of interests. The sponsors have an endogenous motivation to discover high-quality targets and help companies grow bigger and stronger to obtain better return on investment.

Compared with backdoor listings and IPOs, companies through SPAC mergers and acquisitions have the advantages of short time, low cost, strong certainty, and good liquidity. More importantly, the SPAC company can provide precise resources to form high-quality companionship for the target company.

From the perspective of industry development, SPAC provides an opportunity for blockchain companies to embrace the traditional capital market, and is expected to provide an important driving force for the blockchain industry to accelerate innovation and high-quality growth.

The wave of SPAC listings and the bull market of encrypted assets almost overlap. In the past year and a half, more and more SPAC companies have shown strong interest in blockchain assets.

According to incomplete statistics on public information, there are currently nearly 10 blockchain companies that are currently negotiating with SPAC companies or waiting for the merger to be completed.

Author: Capital 6 Eagle


Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/ten-years-of-blockchain-a-journey-of-melting-ice-in-the-capital-market/
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