Authors | Yetta&Sean, Investment Partners at Primitive Ventures
Source | White, MarsBit
This article was written in May 2025. In May, we completed a PIPE investment in SharpLink, which is a phased achievement of our focused research on the PIPE market since the beginning of the year. Primitive Ventures has been actively deploying since the beginning of this year, capturing the CeDeFi fusion trend from a forward-looking perspective, and taking the lead in focusing on Digital Asset Treasury PIPE transactions. Under this framework, we systematically studied all representative transaction cases, and SharpLink is undoubtedly the most critical and representative transaction we have participated in so far.
[The rest of the translation follows the same professional and accurate approach, maintaining the original formatting and translating all text while preserving technical terms and proper nouns as specified.]Based on the current BTC reserve growth rate (Days/Months to Cover mNAV),ALTBG and SMLR can theoretically accumulate sufficient BTC to fill their current mNAV premium within 5 months, providing potential alpha space for NAV convergence trading and relative mispricing.
In terms of risk,MSTR and SMLR have debt ratios of 15.7% and 21.3% of their BTC NAV, respectively, thus facing higher risks when BTC prices drop; while ALTBG and SWC have no debt, making their risks more controllable.
Japan's Metaplanet Case: Valuation Arbitrage in Regional Markets
Valuation differences often stem from variations in asset reserve scale and capital allocation frameworks. However, the dynamics of regional capital markets are equally critical and an important factor in understanding these valuation discrepancies. A highly representative example is Metaplanet, often referred to as "Japan's MicroStrategy".
Its valuation premium not only reflects its held Bitcoin assets but also reveals structural advantages related to the Japanese domestic market:
NISA Tax System Advantage:Japanese retail investors are actively allocating Metaplanet stocks through NISA (Japanese Personal Savings Account). This mechanism allows capital gains up to approximately $25,000 to be tax-free, which is significantly more attractive compared to directly holding BTC with a maximum tax rate of 55%. According to SBI Securities data in Japan, as of the week of May 26, 2025, Metaplanet was the most purchased stock in all NISA accounts, driving its stock price up by 224% in the past month.
Japanese Bond Market Dislocation:Japan's debt-to-GDP ratio is as high as 235%, with 30-year government bond (JGB) yields rising to 3.20%, indicating structural pressure in the Japanese bond market. In this context, investors increasingly view Metaplanet's 7,800 bitcoins as a macro hedging tool against Japanese yen depreciation and domestic inflation risks.
IV.SBET: Positioning in Global ETH Leading Assets
When operating in public markets, regional capital flows, tax systems, investor psychology, and macroeconomic conditions are equally important as the underlying assets themselves. Understanding the differences between these jurisdictions is key to uncovering asymmetric opportunities in the combination of crypto assets and public equity.
As the first listed company with ETH capital at its core, SBET similarly has the potential to benefit from strategic judicial arbitrage.We believe SBET has the opportunity to further release regional liquidity and mitigate narrative dilution by achieving dual listing in Asian markets (such as the Hong Kong Stock Exchange or Nikkei). This cross-market strategy will help SBET establish its position as the most representative Ethereum-native listed asset globally, gaining institutional recognition and participation.
V.Institutionalization Trend of Crypto Capital Structure
The convergence of CeFi and DeFi marks a critical turning point in crypto market evolution, signifying its growing maturity and gradual integration into the broader financial system. On one hand, protocols like Ethena and Bouncebit, by combining centralized components with on-chain mechanisms, are expanding the utility and accessibility of crypto assets, embodying this trend.
On the other hand, the fusion of crypto assets with traditional capital markets reflects a deeper macro financial transformation: crypto assets are gradually establishing themselves as a compliant asset class with institutional-grade quality. This evolution can be roughly divided into three key stages, each representing a leap in market maturity:
GBTC:As one of the earliest institutional BTC investment channels, GBTC provided a regulated market exposure but lacked a redemption mechanism, leading to long-term price deviation from net asset value (NAV). Despite being pioneering, it also revealed structural limitations of traditional wrapper products.
Spot BTC ETF:Since SEC approval in January 2024, spot ETFs introduced daily creation/redemption mechanisms, enabling prices to closely track NAV, significantly enhancing liquidity and institutional participation. However, as passive tools, they cannot capture key parts of crypto assets' native potential, such as staking, yield, or active value creation.
Corporate Treasury Strategies:Companies like MicroStrategy, Metaplanet, and now SharpLink are driving strategy evolution by incorporating crypto assets into their financial operations. This stage goes beyond passive holding, beginning to employ compound yield, asset tokenization, on-chain cash flow generation and other strategies to enhance capital efficiency and drive shareholder returns.
From GBTC's rigid structure to spot ETF's mechanism breakthrough, and now the rise of yield-optimization reserve fund models, this evolutionary trajectory clearly demonstrates how crypto assets are gradually being embedded into modern capital market architectures, bringing stronger liquidity, higher maturity, and more value creation opportunities.
VI.Risk Warning
While we are confident about SBET, we maintain a cautious attitude and focus on two potential risks:
Premium Compression Risk:If SBET's stock price remains long-term below its asset net value, it may lead to subsequent equity financing dilution.
ETF Substitution Risk:If an ETH ETF is approved with staking functionality, it might provide a more convenient compliant alternative, attracting some fund outflows.
However, we believe that SBET, with its ETH native yield capability, can still outperform ETH ETF in the long term, achieving a healthy combination of growth and returns.
In summary, our investment of $425 million in PIPE for SharpLink Gaming is based on our firm belief in Ethereum's strategic role in corporate reserve fund strategies. With ConsenSys's support and Joe Lubin's leadership, SBET is poised to represent a new stage of crypto value creation. As CeFi and DeFi reshape global markets, we will continue to support SBET to achieve long-term excellent returns and fulfill our mission of "discovering high-potential opportunities".
