Wall Street's New Crypto Hustle: SPACs, Penny Stocks, and a Bitcoin Bet Gone Wild

A fresh Wall Street experiment is picking up steamand this time, the pitch is crypto. Inspired by the meteoric rise of Strategy (MTSR), now valued north of $120 billion for simply holding Bitcoin, a new batch of playersfrom Justin Sun's Tron Inc. to Anthony Pompliano's ProCap Financialare jumping into the public markets. Their method? Skip the traditional IPO grind. Instead, raise cash or convertibles, snap up tokens, and inject them into a listed shelloften via SPACs or reverse mergers. The hope: equity markets continue rewarding this strategy with hefty premiums over net asset value, even as voices like Jim Chanos (Trades, Portfolio) caution it may only work when tokens are booming.

What's driving the frenzy is speed and upside. A standard IPO takes months, but these reverse deals can close in weeksideal for firms that want to capitalize on surging token prices. Smaller banks are steering the charge. Cantor Fitzgerald is behind the Twenty One deal. Cohen & Co. is backing Pompliano's. KBW, meanwhile, says crypto-related equity capital markets business could grow more than 300% this year. We're also seeing companies like BitMine and SharpLink Gaming reinvent themselves into Ethereum treasury plays, raising hundreds of millions and briefly watching their stocks take off. Christian Lopez at Cohen says this is driven by market excitement around the ability to accumulate tokens and potentially generate yield.

But there's a catch. These aren't passive ETFsthey're operating businesses, constantly issuing shares or debt to buy more crypto. That creates dilution risk. And the deeper challenge: what happens when token values drop and those juicy premiums start to vanish? Chanos warned that with more copycats flooding in, the advantage could shrink. VanEck's Matthew Sigel echoed that view, noting that the real test isn't building a premium during a bull runit's staying alive after it fades.