$1.7B Crypto Longs Gone in MINUTES! What’s Next? #CryptoTownHall

Summary

The Wolf Of All Streets: Crypto Town Hall

Episode: "$1.7B Crypto Longs Gone in MINUTES! What’s Next?"
Host: Scott Melker
Date: September 22, 2025

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Overview

In this lively Crypto Town Hall hosted by Scott Melker, a diverse panel of industry insiders, traders, and executives break down the aftermath of a $1.7 billion crypto long liquidation that struck the market overnight. The discussion spans technical market analysis, the changing dynamics of liquidations, and the rapid evolution and risks of publicly traded digital asset treasury (“DAT”) companies—especially those holding Bitcoin and Solana. Notably, the team dives into the mechanics and implications of rare mergers, high premiums, and the pitfalls of retail speculation in this new financial paradigm.

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Key Discussion Points

1. The $1.7 Billion Liquidation Flush

Timestamps: 00:00–05:12

• Market Event: The largest liquidation event of the year, with $1.7 billion in crypto longs wiped out in minutes late Sunday night.
• Notable Shift: Unlike past events, altcoins bore the brunt, with Bitcoin accounting for less than 25% of liquidations.
• Immediate Rebound: The market retraced 50% almost instantly and stabilized—an unusual pattern hinting at a “one-off” event rather than a broader contagion.

"Classic in the sense of very quick, very abrupt spot LED derivatives moving almost exactly in tandem with spot... But it is definitely different insofar as it was more alts impacted than Bitcoin..."
— [B; 01:04]

• Exchange Dynamics: Over half of liquidations occurred on Bybit, indicating a “serious buildup in spot vs. perpetuals” leading to a cascade.
• Volatility Paradox: Implied volatilities in options markets surprisingly didn’t spike, suggesting the market didn’t price in continued chaos.

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2. Is This Signal or Noise?

Timestamps: 05:12–06:45

• Panel Opinion: Question posed—does the magnitude of the flush portend deeper instability, or is it just market mechanics at play?
• Miner Resilience: Bitcoin miner stocks (index ‘wagmi’) were green despite the sell-off, seen as a signal that the market may view this as a “buying opportunity.”

"The people holding and buying the miners don’t seem to be batting an eye at this... this is actually the strongest signal... that this is a buying opportunity potentially."
— [E; 05:57]

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3. Treasury M&A and the “Premium” Conundrum

Timestamps: 06:45–14:58

• Strife’s Acquisition: Strife Asset Management bought 5,800 BTC and acquired Semler Scientific at ~210% premium, raising eyebrows.
• Panel Debate: Is paying such premiums rational? Are these all-stock deals true signals of market strength, or artifacts of recent financing structures?
• Mechanics of M&A: If companies with higher multiples buy those with lower, they can artificially boost per-share metrics—echoing strategies from traditional banking’s “roll-up” era.

"If a company is trading at this higher premium to book or higher premium to NAV and you acquire one at a lower premium to NAV, by definition you’re going to increase BTC per share."
— [F, Brian Rudick; 09:51]

• Skepticism Abounds: Some see these M&As as “awareness-building” events as much as pure financial plays.

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4. Structural Pitfalls in the Treasury Company Boom

Timestamps: 19:15–30:37

• Wild West: Companies attempt treasury-like “story protocol” structures, often with incomplete or illiquid token balance sheets.
• Regulatory Barriers: Increasing scrutiny from Nasdaq/SEC is making the process riskier and slower, with companies announcing big moves before being able to deploy or register shares.
• Retail Vulnerability: Small stock floats, late asset purchases, and premature investor enthusiasm have led to frequent boom-and-bust “Mount Everest” price patterns.
• Unlock Problems: PIPE (private investment in public equity) unlocks cause huge stock volatility, highlighted by recent events where shares crashed once they became tradeable.

"The biggest problems that we’ve seen... were huge announcements, massive stock pumps, and then companies unable to actually purchase assets for months, and then shares registering from the PIPE late in a dump."
— [A, Scott Melker; 20:26]

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5. Costs, Overhead, and Value Creation in DATs

Timestamps: 25:14–39:35

• Cost Structures: Being public is expensive ($7–15 million/year). Custody, compensation, and compliance add significant drag, but efficient operators can minimize costs.
• Value Streams:
  • Intelligent Capital Issuance: Selling equity at a premium to book, à la MicroStrategy, is “accretive” (boosts asset per share).
  • Staking: DATs holding Solana can earn yield, making them more profitable than Bitcoin-only treasuries.
  • Discounted Purchases: Some companies buy discounted “locked” tokens, adding another layer of yield.

"We have 105,000–$110,000 a day of revenue. That more than offsets all of our expenses and we're able to reinvest that capital."
— [I, Alan; 37:39]

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6. Retail Speculation and the Responsibility to Educate

Timestamps: 39:35–44:10

• Retail Risk: Many investors jump into DAT stocks without understanding registration cycles, NAV (Net Asset Value), dilution, or structure—leading to outsized losses.
• Company’s Burden: The panel agrees on the need for DATs to be radically transparent and offer real-time, clear metrics for valuation.

"So the notion that people are going to go deeply do their research and figure out the differentiation between 10 Bitcoin treasury companies is nonsense... it leaves it on the onus of the company to be responsible..."
— [A, Scott Melker; 39:35]

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7. Liquidity, Unlocks, and Future Guidance

Timestamps: 42:13–52:51

• Solana vs. Bitcoin DATs: Solana’s liquidity enables flexibility for treasury companies, and staking offers meaningful returns—both less accessible with Bitcoin.
• Stock Unlock Dynamics: Registration of new shares often triggers game-theoretical selling, creating instability. As floats increase, speculation and price swing intensity are expected to decrease.
• Disclosure is Key: Executives emphasize publishing fully diluted NAV and share data, unlike some peers, to allow informed investment.

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8. The Need for Stronger Metrics and Transparency

Timestamps: 52:01–54:00

• Consensus Standards: The panel calls for industry-wide, consistent metrics for calculating NAV and other key data to avoid confusion and promote educated investment.
• Market Maturation: Both speakers and host agree that as the DAT sector matures and disclosure improves, wild price swings should moderate—but for now, “buyer beware.”

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Notable Quotes & Moments

• "The idea that the Bitcoin treasury company trend will somehow blow up and take the price of Bitcoin down with it... is DOA at this point. It was always a kind of a silly thing."
  — [B; 14:58]

• "Not all DATs are created equal...most of our economics go to our investors."
  — [I, Alan; 28:57]

• "There should be a built-in growth premium for a smaller DAT all else equal... there is more potential upside."
  — [F, Brian Rudick; 38:10]

• "Would be nice if we could create a consensus metric for defining mnav."
  — [A, Scott; 52:01]

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Final Takeaways

• The $1.7B liquidation event was one of the largest and quickest this year, but its unique structure (alt-heavy, rapid retrace) is seen by the panel as an isolated flush rather than cause for widespread alarm.
• Treasury companies investing in Bitcoin and Solana are reshaping how public markets interact with crypto, but present new risks, especially for retail investors unversed in arcane share structures and illiquidity traps.
• Mergers and acquisitions at eye-popping premiums are as much about increasing per-share metrics and awareness as true operational synergies.
• Transparency, education, and consistent disclosure around NAV, float, and dilution are critical as this sector matures.
• For investors: avoid chasing DAT stocks trading at huge premiums pre-share registration, scrutinize structures, and focus on companies with transparent, sustainable strategies.

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For more Crypto Town Hall, join Scott Melker’s live sessions every weekday at 10:15am EST.

Transcript

[A]

Everybody, happy Monday. Welcome to Crypto Town Hall. Every day here on X at 10:15am Eastern Standard Time. This is a bit of a bloody Monday after a massive liquidation flush last night, middle of the night, as is tradition on a Sunday, going into Monday, we saw a major move across the board in crypto. As I said, about $1.7 billion in longs liquidated. This was the largest liquidation event effectively of the year, frankly. Pretty impressive that price is sitting where it is. Dave, are you a speaker or a listener? I'm showing you as listener, but welcome to the glitch.

[B]

Good morning. You can hear me?

[A]

Of course I can hear you, but I can't see you. Alex, are you a listener or a speaker?

[C]

I am a speaker. I am here with you in these scary and trying times.

[B]

Scott.

[A]

Yeah, this platform is such steaming hot trash. It just never works.

[B]

Matt and, and Adam are also speakers to me.

[A]

Yeah, I also see Gaurav, Mauricio, Matt, Brian, Alan. Yeah, okay, great.

[B]

Now those guys are listeners to me. Can I start? I'm gonna actually have to leave somewhat early today. You know, I have some, some, some things to do for my wife. But look, this was a classic liquidation flush in one sense and it was totally different than what we've seen in other. In another sense. Classic in the sense of very quick, very abrupt spot LED derivatives moving almost exactly in tandem with spot. There are two differences between this and past liquidation events. One lead, not who led, I don't know. In terms of what got flushed, Bitcoin was a rather small percentage of the overall flush. Less than 30%. Actually less than 25% of the overall flush of what got liquidated was bitcoin. So that's very different than the past. You know, we've seen other Ethereum LEDs ones, this was very broad based across alts. And the second is it almost immediately did a 50% retracement of the upside and then sat in a 50% range in that within spitter spitting distance of that since then. And that's, it's very, it's just very, very different. Whenever we've seen this sort of pattern before, it indicates a one off event. Boom. And now we move on to the next thing. But it is definitely different insofar as it was more alts impacted than Bitcoin and not just in percentage terms, but also in amount liquidated terms.

[A]

Didn't you say this morning on macro Monday that the bulk of it was on a single exchange? Did we lose? Dave, can you guys hear me?

[B]

Yeah, it was, sorry, more More than half was on Bybit, according to Coinglass.

[A]

So what does that tell you?

[B]

It tells me that there was a serious buildup in Spot versus a broad swath of perpetuals on the Bybit exchange. When the spot got dumped at a very liquid time, it brought everything down and they closed their position by buying back the derivatives at a lower price than the Spot in all likelihood. And made money. That's what it looks like. Unless they got super greedy, in which case then they, they got their faces ripped off. If they got super, by super greedy I means left the, the short position running while the market, you know, rallied back 50%. Now that seems highly unlikely they would have done that, but so be it.

[A]

The market always rallies back 50% on one of these flushes and very quickly.

[B]

Well, sometimes, sometimes it, this chart pattern is very bullish. It, it, more often than not it rallies somewhat back and then kind of, then kind of rolls over a little bit and might test the bottom. This one, I mean, for it to do that, it could still, but it, it hasn't. And that, that's been, you know, and it's, it's been hours of a very tight range. It's also interesting. I, I haven't had a chance to, to dig in. I'm curious if anybody else. Has anybody on this panel looked at implied volatility going out a month on Bitcoin and crypto options on Deribit or other platforms and how much did it move based off of this? From what I can see, it doesn't look like a lot, which is also very interesting. I'm curious if anybody has that. That would be good to know.

[A]

Yeah. To the guests, we can't always see you, but you can raise your hand using the little heart icon down here with the hair. There's little icons you can use to raise your hand and you can also just jump in because it's almost impossible to moderate when we can't even see who's on stage. Does anybody have that data or taking a look at that? Dave, you're probably the guy who would have taken a look at that, to be quite honest.

[B]

Yeah, unfortunately I'm just in the process. Yeah, I haven't had a chance and I'd have to dig in. When you look at the things I look at, they're generally backwards looking like Bitbo and others. And it doesn't show any tick up in their volatility predictions. Probably tomorrow you'll see a little bit of a tick up. But I'm curious how much.

[A]

Yeah. So okay. To Go to the. To go to the panel and open this conversation. While we're on this topic, does anybody think that this is more than a $1.7 billion flush of liquidations, which we see all the time when there's either too much euphoria or just an opportunity? Does anybody think that this is a deeper signal of something else? Mauricio, go ahead.

[D]

Thanks, guys.

[E]

I am just looking across through the assets I track here, and it's a bit of. It's a bloodbath, basically, all across, you know, crypto assets. What I do see that's standing out as an outlier to me is that the Bitcoin miner index wag me is green for the day. And it's actually at all time, obviously.

[A]

An iron inside for today. I mean, they're absolutely flying.

[E]

Yeah. I haven't seen the individual stocks. I follow this more as a proxy. And to me, this is actually the. Probably the strongest signal out of the things I'm tracking, that this is a buying opportunity potentially, and just, you know, a market hiccup, because the people holding and buying the miners don't seem to be batting an eye at this. I did. I did find the interesting. The news about Strife Asset Management purchasing similar scientific to be quite interesting. And I had thought that that might be some of the reasoning behind the sort of redness for the day and this idea that you saw Nakamoto get a. Get a piece of Metaplanet. Now you're seeing Strife purchasing similar. And I think people might be looking around and saying, I thought the whole point was to buy Bitcoin, not to buy each other. But I'm curious to see what other people think.

[A]

Well, Strive also bought 5,800 bitcoin in the same announcement, and they're buying, from what I read, similar at a pretty high premium, like 210% or something to the underlying value, which seems a bit surprising. I think anyone who listens to this show knows that we've been anticipating a lot of mergers or acquisitions in the treasury space that, you know, a few will succeed and the rest will probably get consumed. We are seeing the first iterations of that. We actually have two of my friends here, Brian and Alan from upexi, who were effectively the first major Solana treasury company. Maybe you guys have some asset on sort of the what this means or the treasury trend. I know you're not a Bitcoin treasury company exactly, but obviously you're very on top of everything that's happening in that space.

[F]

Hey, thanks so much for having us. This is Brian Rudick. I can share some views, so please I I candidly thought that M and A was quite unlikely in the DAT space. You know, if you're a seller and you're trading below one times, why would you ever sell, you know, for something below Navigation and then if you're an acquirer and you can just buy the assets at one time out in the marketplace, why would you ever pay something greater than one time? And then there are all these additional other items that I thought could have made it unlikely. So you know, there's significant fees for lawyers and bankers. There's like management and cultural considerations and it takes time to consummate these deals. All that said, I'm now starting to think that maybe it would be more prevalent. So if a company with a higher M Nav actually acquires a company with a lower M Nav, it is by definition accretive to your bitcoin per share Solana per share. And then it comes with other potential benefits too because half of this is this visibility game. Maybe if you are now this larger combined institution, you can attract more eyeballs, you can attract more trading volumes which enables you to actually drip more equity out there via an equity line or an ATM. So this deal, at least according to bitcointreasuries.net I have strive at four times. And so even if Semler is trading at below nav and it, you know they bought it at this 210% premium, it still is nicely accretive to BTC per share for asset or strive and then it just depends on what happens with the multiple. So if a company is trading at this higher premium to book or higher premium to nav and you acquire one at a lower premium to nav, by definition you're going to increase BTC per share. If your multiple holds, then your stock should move up commensurate with that increase in BTC per share. If that multiple does not hold then obviously anything can happen with the stock. And this was actually famously used by M and T bank. It it had this premium multiple it traded at two times book and it throughout all the 80s, 90s and early 2000s that use this to engage in this bank roll up strategy. And as long as that premium multiple held it was able to do this and really compound nav or compound book value for shareholders over a period of time. Then in the mid 2000s its multiple came down and it had to move away from this strategy. So it's a long explanation but I actually think like yes it's possible and we could see more of this going forward.

[A]

Matt, you had your hand up.

[G]

Yeah, I think this is really the story of the day driving the narrative right here. Scott, some really great comments already but as I've been looking into it for me my main question really is if you're a strive shareholder, are you going to accept the full dilution and does the premium hold in the merged equities valuation or the merged entities valuation? So that's really kind of what I'm waiting to see.

[A]

Yeah, I think that's what everybody. As I said from what I'm reading it's about 210% premium to the last close for somewhere it just seems really really high. I mean Brian, you said you weren't expecting these. Why, why do you think it would pay such a premium in an all stock deal?

[C]

Let me, let me. I don't think it's actually, I don't think it's really a premium. I think this is probably a weird artifact because they also just raised money and something on there because like for instance if you just pull the similar stock today it it spiked like up 15, 20%. It's now down to only up 10%. So like there's clearly something about the structure of the deal and the pricing that means it's not actually a really a premium on the similar stock or the similar stock would be spiking to meet the premium.

[F]

I think it also has to do with like your ability to raise capital. So even if you have okay ish trading volumes and you can issue equity at a premium through the atm, you're going to be limited by how much you're actually trading each day. And I think that was probably the case with ASSD and here if you find another company that is willing to accept your stock as consideration, you know, you can actually go quite big and you can do it in something that might not be as accretive as if you're out there raising equity via the ATM at four times and then buying bitcoin at one times. Maybe you're paying above one times but it's still accretive to bitcoin per share. And this enables you to actually get the funding to do it in a big way and quite quickly.

[A]

Go ahead Luke.

[H]

Yeah, I mean I think that the fact that you've got similar, while similar is up 8%, it's off of a much smaller base. So net net this has been value destructive for you know, the two combined companies. And so you know, my guess would be that most other people who are thinking about Acquisitions are going to look at that and pause.

[A]

Brian, what do you think of that? Brian, you're a new resident bank analyst. How about it?

[F]

This is a little bit outside my expertise. Typically what you would have seen when one bank acquires another is they would hold pre market a conference call and they would put out a new presentation and they would demonstrate to the market the increase in, in book value per share. And so, you know, I'm a little surprised that we didn't see strive do that and just show, you know, on a pro forma basis the increase in bitcoin per share. I think the market would have received this much better if they had something more to go off of. I think this is all new for a lot of folks. You have a lot of crypto investors investing in these vehicles and are, you know, even I'm not too sure how to think about all of these components. So yeah, I think like that's one thing in the future when this does occur, if this does occur again, that I think could really help investors and could lead to better stock price performance.

[A]

Yeah, a lot of it's way over my head and is not a criticism. I'm sure they know what they're doing, but it feels like you would just take the money and buy bitcoin and not pay a premium for a company that's buying bitcoin. What am I missing?

[F]

I think so. But you have to be able to.

[A]

Raise the funds and the. Right. Of course. Yeah.

[F]

I think that that is the one reason why you might do this.

[B]

Scott, the most important part here is this part you're not talking about, which is whether they're paying a premium because they're getting the block purchase. There might be some other things to it. And as was noted, it's not obvious what the premium is. What you, what, what this is telling you is something very important, which is all the people who believe that these things are at large will go to a discount are missing the fact that to the extent that companies with absolutely nothing in a business model beyond owning bitcoin will never really go to a discount in any significant sense because the others who do have business models will buy them, even if it's just to buy the bitcoin. So the idea that somehow the bitcoin treasury company trend will somehow blow up and take the price of bitcoin down with it to me is DOA at this point. It's pretty, pretty clear. I mean it was always a kind of a silly thing. I mean it could be that the price of bitcoin going down will take down the companies. That is absolutely possible. But the opposite, no, not possible.

[A]

Bitcoin takes down the companies. There could be a situation where then they're forced to puke their bitcoin and at least send bitcoin lower than it would have gone.

[B]

But no, what will happen is it's stronger buy weaker. Even if it's stock. Even if it's all stock.

[A]

Makes sense.

[B]

Adam.

[A]

I was just going to say Dave, I mean, do you think this is just more of an awareness building event.

[I]

For them rather than just going and buying Bitcoin then? I mean, is this just like to.

[A]

Put it on our radar? Like I didn't even know Vivek had this company. Right. Is that like the way you look at it?

[B]

I never want to speculate about what other people's motives are, particularly people as smart as we're talking about now. Maybe Vivek is a smart guy. His board of directors are smart people. At least one of them is a friend. I am not going to speculate. I refuse.

[A]

I tried to put him on the spot this morning and yeah, that wasn't iced us.

[B]

Well, he was right. You know, every, anyone who's ever been in, you know, under securities laws knows how ridiculous that is.

[A]

Yeah. By the way, I saw about the news.

[B]

I did see Gorv.

[A]

Go ahead. Yeah, I couldn't see his hand up, so. Thanks. Go ahead, Grove.

[J]

We are in the middle of a very good conversation. I'll just go a few steps back with our friend. I forgot his name. Probably Matt amongst the many speakers. First, I'm glad that you found reasons for DATs to buy each other. Not just stocks, but sooner than later merger acquisitions. If you have any further doubts on the cost of lawyers and everything else, just think about it from one perspective right now. Our little price movement of the stock versus Nav has triggered to buy stocks just add one more layer of spices which is the asset and the foundation of all these companies is based on already a super volatile asset or maybe sometimes like many assets, let's say Solana and whatnot. So, so there will be like mega crashes that would probably be much bigger than any cost and a big premium. And then comes the point where like where exactly can treasury companies decide to dilute? Or where exactly like, like Scott said, where exactly do they decide to puke? And that would also be a decision. So altogether what we are looking at is the institutionalization of digital assets through the Treasuries where all these super smart people that have already done and practiced Assets and asset building basically books now called Treasuries for many, many years.

[I]

Right.

[J]

So all these permutations combinations will only lead to better stabilization of digital assets. What do I mean by that last? And I know I've been blamed of usually hosting monologues, so I'll quickly shut down whenever I look at Scott. I'm just like so quickly wrapping this without a monologue, extended monologue. We will end up having these Treasuries acquired by others, no matter what the cost is, of course, tbd. But the best part of all of that is that all these digital assets most likely will be held under Treasuries, which the way I speak about it, in the crypto term it is the burn address. But this time the burn happens for a cost. Tokens don't come back from the burn address. And burning usually in the token world is super positive. Any token that goes inside crypto treasury is a fantastic burn that has created value. So as long as we keep practicing what we have practiced in financial world, I think we are doing just about fine in crypto. That also, by the way, covers the last topic, which was largely about what happens when bitcoin Treasuries go down. Exactly the same thing that you started your discussion with, which is other companies buying them, maybe at a. At a much deeper discount, which is great. I mean, bitcoin still stores value eventually.

[H]

I already talked.

[A]

Your hand was up. So welcome to the glitch. Okay, so all of that, it's been all that we just discussed on these. We're now obviously seeing some crazy treasury company structures happening. I saw one announced yesterday for a token that doesn't exist yet that also had Solana on the balance sheet. Not sure how that gets past the nasdaq, but I think it's very clear that there is a bit of mania in this space and that the conclusion will be interesting to watch.

[J]

Haven't you heard story protocol, Scott? Story protocol was the first one and then there are zero G and whatnot, like tons of tons of Treasuries. Don't forget the narrative. The narrative is I'm not surprised you have a datco. I'm surprised you don't.

[A]

So, yeah, well, okay. I'm not surprised that people are trying it. I'm going to go back to Alan and Brian on this because you guys did this extremely early. Like I said, effectively the first Solana treasury company. There's been rumors, I'll say, but very wide reports that this isn't as easy as it was.

[E]

Right.

[A]

I mean, the nasdaq, obviously, is making this much more difficult. The SEC has a spotlight on it. So are these things even going to list? I mean, one of the biggest problems that we've seen in the treasury space is actually that you had huge announcements, massive stock pumps, and then companies unable to actually purchase assets for months, and then shares registering from the pipe late in a dump. That's what happened to, certainly with, with Nakamoto sbet we've seen. Alan, I know you and I kind of talked about this privately after I interviewed Kyle Samani yesterday. They raised a $4 billion ATM. Their shares have not registered. What happens if they start using that before there's price discovery? There's a lot of still major pitfalls here, the way that these things are structured.

[I]

Yeah, thanks, Scott. I agree. Brian and I looked at these and the way they were structured. We never had an ATM set. You know, we kind of went about it the, the old way. We raised the capital, we registered the shares, and even, even at that time, you know, we still had a, a big downdraft. And, and that's pretty normal.

[B]

We, we.

[I]

We are, you know, kind of interesting to see how, like you said, sbet, like it was. It was, you know, they announced these deals. They got a small, really small float of a million shares. The stock went to, I don't know, 80. And they're raising money off the ATM. And it seems like a lot of, you know, my concern and our concern around it is these individual investors, you know, getting hurt that just the retail guys don't understand. It's in the past when there was a change of a control or something like that, the SEC always made you file a new S3. But there's a new thing where they become Wixie, which means they can automatically register the shares if the stock, even though it's not registered and the company trades above $750 million market cap.

[B]

So there's this little.

[I]

It's not little, this major thing that's causing a lot of companies to be able to register shares whenever they want, but they're holding those back and hitting these ATMs. We don't. We, you know, we're not in that position. We don't do that. We, we raise capital. We file registration. We try to go with, you know, transparency. But I just hope it doesn't ruin the, you know, the reputation of some of the dats. But, you know, that's what we're seeing in this field right now.

[B]

Right.

[I]

But you and Brian's got another.

[H]

Hey, Alan.

[B]

Alan.

[H]

What? How do you talk about your investor base, who is buying these Treasuries.

[I]

I think there's a lot of retail, there's a lot of institutional people outside of crypto that are interested in them. As we're, I think Brian and I are scheduled to do like 20 conferences. We've done like five. We're really finding that the smaller institutions, the smaller family offices have a real interest because they do. A lot of us on this call understand how value can be built and that there are going to be a lot of, you know, opportunities for, for consolidation and, and, and it's not all just about like, get in at one times nav, trade it, you know, hopefully sell it two times nav. So I think there's a, a lot more of mainstream smaller institutions that don't get to see these deals through the banks because everything's going to the same 20, 30, 40, 50. Investors really want to be part of it. They're just trying to understand it.

[D]

Thanks, Matteo. Yeah, this is very insightful and this is not my area of expertise, but I was actually just sort of curious. For all these treasury companies that are popping up, does anyone have any insight as to what kind of burn and overhead these treasury companies are operating with? Obviously with all the financial engineering going on, with all the legal hurdles, I imagine that, that, that these teams are lean, but the actual overhead may not be insignificant with everything that's required. So I'm just sort of curious, like, what's this Runway versus the, the actual balance sheet and war chest that they're building and what, what is the margin? Right. And like what's required for them? Because, like, at some point, at some point, right, we're gonna reach a place where all of these companies are forced to post their earnings and that's going to be very dependent on the performance of the market. So I was just curious if anyone has any insight there because it's a big looming question in my mind as I'm not exactly sure how to like gain exposure to these things and where to place it. Trading them, you know, as an investment of an investment.

[C]

Yeah, I mean, you're talking just being a public company is several million dollars a year on the low end. You've got, let's assume we're talking like a billion dollars. You have, you're looking right there. Even if you hit a good deal, you're looking at a million to two just on your custody fees. Oh, a year for hosting this, assuming you're using a third party custodian, which I have to imagine all of These guys are because you don't want the liability of doing self custody yourself as a public company shareholder. So I'd say you're looking at. And then the really big question is basically you've got a five to ten person team. Figure it. So depending on sort of how extractive you're being and how much you're looking to make for yourself, I'd say there's no way you're doing this for less than 7 million a year in overhead. And I think most of these are probably looking more at like 10 to 15. 10 to 15 even with a relatively lean team.

[A]

Yeah, my Brian, I know you know this, so go ahead.

[F]

Yeah. My view is a lot of this depends on the operating company that you're connected to. And so like Upexi first and foremost is a consumer brands business. We run roughly break even. And so that can cover, you know, all the costs to operate that business and then some of the public company costs as well. We can actually utilize our size to push down prices. So we use three different qualified custodians and the majority and the main ones that we use are charging a single digit basis points for custodying our assets. We're also using probably seven or eight different validators that we delegate our soul to. The reason that we don't run our own validator is because the vast majority of them are passing back full economics. So they're literally keeping no money at all and they just basically want as much stake as possible. So I'd actually contend that like the costs of doing this are quite low. There obviously is management compensation, but that is absolutely aligned with shareholder value creation. And so, and then my point is just looking at these costs vis a vis, like all the value that we can create, we really have three different value accrual mechanisms. The big one is our ability to do intelligent capital issuance. This is issuing equity above book, which is by definition accretive. So if you think about MSTR's history of issuing equity at roughly two times, they're literally selling a dollar for two or buying Bitcoin half off. This is how MSCR has more than tripled the return of Bitcoin since it turned on its Bitcoin treasury strategy in August 2020 without having very much leverage. The second thing is we're staking our treasury to turn it into a productive asset. You can get that obviously with owning SOL natively or probably forthcoming in an etf. But like I said, we can do this for very low economics. And then the last thing is our ability to Buy Luxel at this roughly 15% discount, and over time, that discount will move to par. If you put that discount into any sort of yield equivalent, we're roughly doubling that 8% staking yield because we still get that 8% and it's only a 1.3 year weighted duration. So all that's to say is we can create a lot of value for shareholders vis a vis. There's some cost embedded there, but, you know, we. We do think that it's worth it, and that's been reflected in the stock price.

[A]

Alan, you were jumping in there as well.

[I]

Yeah, Sorry. Sorry. Yeah, I think just to click on what Brian said, like, it is really important that you look at what the underlying business was before. Like, we decided to do this, and we're the same. You know, we had our business and we issued this announcement, and then we built the Treasury. A lot of these are just takeovers by crypto, you know, crypto holders or other companies. That kind of. Kind of seems like a little bit of a cash grab. But so our economics. You know, most of our economics go to our. To our investors. We don't have, like, these high sponsor warrants on these new deals. Like, you've seen these deals come out. Like, the last couple of deals on Solana have been really laden with high, high warrant, almost penny warrants. So we're not. We're not. We're not exactly sure, you know, on what level. We looked at the Ford deal, like possibly $150 million of. Of fees to the sponsors. I'm not sure how that's warranted. But, you know, it is important to summarize that we, you know, we can only control. We control, like, we have, you know, a low fixed cost. And we're working really hard to pass all the economics on. So I think not all debts are created equal. And we're hoping that.

[F]

That.

[I]

That, you know, certainly shows over time.

[A]

Mauricio.

[E]

Yes, guys. I just wanted to make a point that I don't think we've touched on. And I'm curious if anyone here has better, more insights on this than me. But I remember last week we were chatting here in the spaces, and we were. We were watching around, you know, Nakamoto stock getting. Getting crushed by the markets, down 50%. I think it was exactly a week ago and largely due to the fact that there were some massive pipe unlocks that came in or that basically became available to be sold. And I think people took a chance.

[A]

It was 200 million. It was 200 million.

[E]

And now I saw Reports last week that Stryfe has some massive unlocks coming in in the first or second week of October. So I thought to myself, would it, you know, could it be that they're taking a page of the NACA experience and trying to create some more buzz and awareness before this unlock happens so that there's more of a bid under it? But curious if anyone has any different insights because I did remember seeing yesterday that there were some big unlocks for that, for strife coming in in the first or second week of October. Very, very sizable. So I'm curious if anyone has any, any details on that?

[A]

Anyone? I don't have specific details on STRIVE unlocks. I can only say that the pipe structure that's being used is problematic in the past for sbet, obviously NACA and others, and that we've seen that very transparently because I mean, in the case of David Bailey, he went on that tweet thread Mauricio, when we were talking about this last week where he basically said it's the investors who are shorting.

[E]

Yeah. Like we're rotating. I think it was like bad investors for long term investors or something along those lines. Like we're just basically switching over our investor base. And I wonder if that's if other people that use a similar structure looked at last week's event and thought to themselves, well, we probably need to act fast.

[A]

Yeah, well, Marisa, that's what I was saying with the Ford deal in my conversation with Kyle Simone yesterday, because they did, to their credit, they raised 1.65-ish billion cash. They bought $1.5 billion worth Salana effectively immediately. But then they had the 4 billion ATM and I asked him and he was, I don't know, either not willing or unable to comment. I, I can't really speak to their position there. And I said, well, you know, if there are you going to use this ATM before the shares register and your pipe investors effectively exit, as we've seen over and over again before, there's price discovery on the stock because that's why these things have the Mount Everest pattern on the chart.

[F]

Right.

[B]

Totally.

[E]

And, and I think that maybe he's trying because I believe Semler, having been around for longer, might be perceived to have a more engaged investor base. And maybe he's trying to get some of that, maybe this move is intended in some ways to, to get some of that bid and some of that, you know, I, I guess I'm not, I don't want to call it fanatism, but that, that allegiance to the Stock that, that, you know, seems to be go, go beyond in some cases beyond logic. It's, it's more like for the cause. So I, I'm curious, I'm curious if anyone has a similar thought or has considered that.

[A]

Allan?

[I]

Yeah, yeah, I want to, yeah. Just on these, so on, on the very first registration on all these deals because the flow is so small, there's just no way to prepare the markets for the downdraft. Right. Like when you, you know, in our, even in our case we only had a million 1.4 million shares in the float. We had 40 million shares coming. Now we didn't sell anything on the ATM or any of those things. So you know, investors just have to understand like, and in general when you raise capital as a public company, it almost always trades back down to where you raise the capital. It doesn't matter which company you are unless you're Microsoft or you know, a multi billion dollar one. And they don't usually raise capital. So like investors just have to look at nav, what the value is and know where to invest. These retail deals into restrictive floats are very, you know, they're always going to be this, this, these giant ups and downs which I think one, you know, and not to talk about us but like each time we do these deals and all that's like the first round, the second round, the third round, it should come more and more in line and, and be a little more steady as you build out that retail base. So I think that's just something that you know, the companies and even all of these chat rooms and this room can really kind of help. Just let people expect what's going to happen, you know. So I think.

[A]

Go ahead, Lou. Yep.

[H]

I was just going to ask if Alan, if you can talk about Wall street coverage of the debt sector and you know, how you think that is. If there's anybody that you think is particularly good that those of us who would want to read that research should read.

[I]

I think, I think there's been, there hasn't. Well, there's been more of the companies coming on, putting out research. Most of it, even though they say it's independent, it's really not, it seems like they're, you know, they're working with those clients. But the only, the only value from these smaller research firms right now is just to understand, you know, NAV and how to, and how to calculate it so you can put your money to work and really, you know, intelligent, you know, at an intelligent, you know, point right. At the right premium where that you think whatever the individual investor thinks is the right premium on these things. Right. So like we, we personally think, you know, Brian and our team, we think microstrategies at 1.7 should be the, you know, the. Around the floor for, for like a Solana company because the staking revenue is, is more significant and, and the other side is on smaller companies. Maybe they deserve a, a larger premium. But to summarize, I think, I think.

[H]

The research right now is not. I mean, I think the research out.

[I]

Right now should be used. Should be used.

[B]

Should.

[I]

Should be used for like a guideline on how to, how to calculate NAV and where you think you should invest rather than, hey, I should invest in this because I see research.

[H]

And, and I get what you're saying about the higher Solana staking, but there's also much higher Solana issuance of tokens. So should I would assume that has the opposite effect?

[I]

Yeah, I'm just talking on the premium that you're willing to pay based on nav. No, there's no, there's no doubt that Bitcoin as you know, the financial holding has, has, you know, much more predictable or, or what we consider predictable, you know, upside, depending on where you're looking at it. But I think it's just really, I'll. The only reason I was using that is on calculate. Because we talked earlier about calculating reven. How that could offset, you know, the cost of public companies.

[A]

Yeah, Alan, I mean, to, to your point, I've been saying this kind of since the beginning and this addresses, I think, Lou, what you're saying. A Bitcoin treasury company, if you're, regardless of what you view as a worthy treasury asset, because obviously a lot of people think Bitcoin is and others are not if the goal of the company is to benchmark to some underlying asset and beat that asset, that's effectively impossible with Bitcoin without taking on leverage or financial engineering. And it's actually quite easy with Solana. I mean, Alan is at a, I mean that. To what you and Brian described, that's what seems like to be the case. You can use Solana to make more money. To make more Solana.

[B]

Correct.

[I]

If you, especially if you're. So if you're, if you're a Bitcoin treasury, like Nakamoto or whatever, they have no income coming in monthly. So whatever the monthly expenses are, do they have to sell Bitcoin to do that?

[F]

Right.

[I]

Do they have to. Where are they going to get that income from? So for us, we know, you know, on our 500 million treasury we, we publicly said we have 150, 105,000 to $110,000 a day of revenue. You know, you can call it whatever you want to call it. That more than offsets all of our expenses and we're able to reinvest that capital. That's all I'm saying is that's how, how, why we think, you know, certain dads should trade at a, either a slightly higher or slightly lower premium.

[F]

Yeah, I'd jump in with that is a really great explanation. I think there's a couple other things too and Alan hinted at it too. So one is there should be a built in growth premium for a smaller dat all else equal because a similarly sized, similarly price raise will be much more accretive. So for in example, if we issue 100 million in equity at 1.5 times, it's going to be materially accretive for our sole per share versus if MicroStrategy issues 100 million at any multiple, it's not going to move the needle because they're so big. So there should be some embedded growth premium for us. Number two, all else equal Bitcoin. And we do believe that it is the best monetary asset in the world. But it is also a $2.5 trillion asset. It's probably not going to 5x anytime over the next year or so. Whereas something like SOL is literally 5% the market cap of Bitcoin and it could, it is within the realm of possibilities. So all else equal there one could argue that there is more potential upside. So there should be this embedded growth premium for a digital asset treasury company underpinned by a smaller token provided that you can have confidence that it will perform well over the medium term. And then lastly there are these additional value accrual mechanisms like staking and like buying discounted locked tokens that investors also should be willing to pay up for.

[A]

I think it's very entertaining when I get into these debates on X and we've had them on this show but where you know, we mention all of these things about these stocks pumping massively before there even is assets on the, on the balance sheet before these shares register. And the answer is always, well you know, retail should do their own research. They should check SEC filings as if anybody on the planet has ever done that, right? I mean in the Robinhood generation people buy stock 30 seconds after they hear about it for the first time. So the notion that people are going to go deeply do their research and figure out the differentiation between 10 bitcoin treasury companies is nonsense. So to me, that means it leaves it on the onus of the company to be responsible and not put investors in a position where they can buy a stock at $26. It's obviously going back to one or two, which is what happened for better or for worse. I don't know that it was intended, obviously, with Nakamoto, but there was may to august of the stock trading publicly before those shares registered or they even bought any bitcoin. That should not be the structure moving forward.

[I]

Am I missing from a company point? It's impossible to stop, to almost stop that.

[A]

Right?

[I]

Like, we announced the deal at $2. We announced the deal at $2.28. We didn't sell off the ATM. We didn't, you know, and the stock went to 20 like we never had. And, well, we were one of the first. Right. So we did. We had no idea, like literally our phone was blowing up. Why is your stock at 16, 17, 20? I'm like, we have no idea. We filed the registration statement for 43 million shares. Right. So it is hard for, you know, you can't really put out a press release saying, hey, don't buy the stock. You know, it's not retailers. But I think, you know, the messaging, you know, the messaging has to be clear that each time a registration is filed, the more mature the company, the less painful it gets. That's the good part about where DATs are coming or the companies, you know, that are. That are going to do this multiple times. It should start to. Should start to, you know, calm those peaks and valleys.

[A]

Yeah. Take away here for an audience of 5,000 likely, you know, retail buyers of these things is don't buy one at a 20x premium that just launched. Maybe it's probably coming back down to what the investors paid. As you said there before, Lou, you were about to jump in.

[H]

Oh, I just like. Isn't buying lock tokens an oxymoron?

[F]

Well, we could buy them otc, so they're actually quite liquid. If we ever did need to sell them, we could sell them for probably what we got into them at. But because we have this buy and hold strategy and don't ever intend to sell our Solana, there's actually no reason for us not to buy lock sol and take advantage of that discount.

[B]

Yeah, I get it.

[A]

Brian, you said roughly 15%.

[F]

Yes. And those typically unlock monthly through January 2020.

[B]

Lou.

[H]

Oh, no, it makes sense.

[A]

Yeah, I'm a hand up.

[D]

Yeah, I just had a question again. As I try to understand this better and learn with all the listeners here, which is with these, with these treasury companies going live, these investor unlocks coming so early, like what's the deal with that? I mean even in crypto we've had these like very long lockups and vesting periods become standard for anyone who's getting in early to these things, creating the opportunity for market participation and sort of things starting to level out to see these things go live and then opportunists taking profits and just dumping on everybody. So early on I was just kind of trying to get some more information on that, like what's going on there.

[A]

But though they don't have their shares, though, like to be clear, I would tell you in these cases where we've been talking about these, it's like Nakamoto, I think the shares registered when the stock was back down to $3. So the idea at least floated by Bailey, was that they were being shorted aggressively. But it was not the initial investors selling their stock down from the 20 something price. It was actually that caused the move from, you know, 350 down to 120 overnight last week.

[B]

I got it.

[D]

That's helpful. That was misunderstood.

[A]

No, I think everybody does, right. But that registration of the shares was the very tail end of that crash. Brian, you jump in. Yeah.

[F]

Here's an example of what happened with us. So we had 1.3 million shares in the float. Half of those were closely held. So it was 700,000 shares outstanding. Then we issued 45 million common equity shares or pre funded warrants, which are essentially share equivalents in exchange for that 100 million in that initial private placement. We then filed our registration statement with the sec. They take a look at it. There's some back and forth there where, you know, they have to deem it effective for all those investors that came into that hundred million dollar pipe to sell. And then when they do deem it effective, which is typically post close, so after market, then it becomes this game theoretic selling. Because in crypto terms it really is this low float, high FDV construct where if you think other investors who hadn't been able to sell might sell a little bit. And by the way, if you're sitting there on a five bagger, you know, it's probably prudent to at least sell a little bit. I spoke to all of our investors. I actually don't think that they were selling, but I think that there were fears of potential selling that started to bring down the stock in the aftermarket. And this happens very commonly and there's just not that much liquidity to support it. And then you start to see these things trade down 70%. There are also commission only brokers that will literally look down the S1, they will call each of these funds and they will actually enable them to sell the stock as soon as that registration statement goes effective on this deemed to own basis. So they will actually incite this rush to the exit. And, and so even though I think like a lot of these are flush with long term holders in the form of crypto VCs, I actually do think that it becomes a scheme theoretic like game essentially where you see a lot of folks just pounding this in a low liquidity aftermarket that you see these things drop 70% when the registration statement goes effective.

[A]

Matt.

[G]

It'S interesting here talking about the DATs and I just got a question for you guys. When it comes to the Solana, I mean obviously we know bitcoin has like what, like the deepest liquidity in the market but if you're a Treasury company and you need to sell so fast and prices move not in your favor, aren't you having to rely on big centralized exchanges like Binance or Coinbase and Treasuries inherit all the risk of something like a FTX style collapse, don't you?

[F]

I don't know.

[G]

This just kind of, I'm just kicking it around in my head but I'd.

[D]

Love to know your thoughts.

[F]

Yeah, we'd consider Solit Sold to be very, very liquid. The 24 hour volume on it is 10 billion I believe. And so but we also don't ever really intend to sell our Solana. So if you look at our credit risk leverage, we only have a $40 million line outstanding and that's relative to almost 500 million in. So you'd actually need sold to move down quite considerably and for quite a long period for us to be for sellers.

[A]

Yeah Matt, I think this, your question speaks to the very wide breadth of structures for these treasury companies and why people need to do their research if they know how to and pick the right ones. Because your question is probably very valid for a. I don't know, I'm not even going to throw it out for coin number 79 on CoinMarketCaps Treasury Company. Right. But likely not for Solana if you're well structured and don't have a lot of leverage. Alan, I saw you were trying to jump in there.

[I]

I think Brian hit, you know, kind of hit it there for us, you know, with, with the amount of liquidity in Solana now and the more liquidity coming to these markets. Right. So like if we get more mainstream adoption of, of regulatory roadblocks that have been there, I think more and more liquidity is going to come. But just on the final side, like when Brian went over the way, we had 1.4 million shares. So each time as investors want to take some risk out of it, now we have 43 million shares outstanding and then you'll have 80 million shares and it becomes much more difficult to manipulate. And I will say that these things on our unlock or I think our stock was $15 when the announcement came out, and on 740,000 shares of volume it was down at 4. So I don't know exactly how that happens. I'm not a market, it doesn't make any sense to us. But I think as these floats become bigger and bigger, you'll have more, like I said, less peaks and valleys and hopefully we'll get to here. The companies will get there over the next couple quarters.

[A]

Yeah. Alan, since we've only got a couple minutes left, I would ask you and Brian, since we have a big audience and they still don't really know how to look at these and value them, I mean, how do you differentiate yourself, make sure that it's a safer investment than some of the more speculative ones, you know, from your perspective, to answer the question like Matt's, how do we clarify that? And you know, why should people purchase certain treasuries and not others? How do we even really do our research?

[I]

The one thing we try to do, and Brian can do too, is we try to be clear on where we are on the fully diluted M Nav. So on our website, it'll show you even on shares that have not been registered yet or have not been issued on our debt so that you can make a really informed decision. It's really hard. Like I invested in sbet, I even put some money in bmnr, but I can't figure out where they are on real time actual M Nav because they don't tell you how many shares they sold yesterday on the, you know, on the ATMs and stuff. So what we try to do is just really be as clear as possible. So if you're making an investment based on like the actual premium to NAV and you built out a thesis on where it can go, we just want to give you all the info to make the clear decision whether there's a registration that hits for 24, 48 or 72 hours. We don't think that's that relevant for us. We would like our investors to know, you know, and we clearly put out the S1s and we, you know what it is? I, I. It's just clarity. Like, we wish everybody, and we hope everybody can, can just like put that data out there so investors can make clear, you know, decisions and also have a, have a time frame that's more than three days in their, in their mind.

[F]

Yeah, I agree. I think that a lot of this is like an investor education component to it. And like, here's where we've put out what we call a fully diluted M navigation. There are all these sorts of things that could really impact, like a basic mnav. And, you know, if you looked at our basic M nav, you'd think we were trading at a pretty material discount to book value. And that we don't believe to be true. We think that there are all these different things that make it appear so, but should actually be adjusted for to get at the true underlying valuation that the market's ascribing to our stock. And similarly, we've done that with an adjusted sold per share metric. And all these things are so gamble. So if I go out and I raise $100 million and one month I just buy 1 million worth of soul, and then the next month I buy 99 million worth of soul, I could go out there and tell the market that I increased SOL per share from last month by 99x and then I can go out and I can borrow 100 million and the very next month buy 100 million worth of SOL and I can tell the market I just doubled SOL per share again. And by our adjusted SOL per share metric, we would show no increase in SOL per share because it was all timing related and leverage related. And so I do think that there's just a big market education component to this as well.

[A]

Would be nice if we could create a consensus metric for defining mnav.

[F]

Yeah, we've been working with all the dashboard providers. It's just, it's not a very simple exercise. It takes a good amount of expertise. And so I haven't seen one that I think, like, completely nails it yet, but hopefully we'll get there.

[A]

I mean, last week when Nakamoto price dropped, I believe the treasury dashboards had them at 0.75-0.7, 0.8, somewhere in that range as a discount to nav. And was very quickly clarified that they were still trading at a slight premium. Right by. By David Bailey. So I don't even think people are looking at accurate information when trying to make these decisions. It's pretty, I mean I guess that's the hallmark of a new trend, a new space.

[F]

Yeah, we see treasury trackers where someone announces a billion dollar shelf or a billion dollar equity line or ATM and like these treasury trackers like give the company the full credit for, you know, as if they had that money in the door when you know the company might trade a million dollars per day and you're going to be limited by like your ADTV in terms of how much equity you could drip out there. So yes, I agree fully. It's going to take a little bit of time but we're doing our best to help inform people as best we can.

[A]

Perfect. Any, any final thoughts? Alan, Brian, we're right here against the time so I'm going to go ahead and wrap but I want to make sure I gave you full time to answer that question.

[I]

No, I think we've done the best we can do and we're continued even. We just created a new metric so we're trying to do our part. We're really trying to build a long term business here with long term shareholders. So hopefully, like Brian said, hopefully these other systems can figure it out and maybe keep up and give investors clarity. It makes it really interesting to see how these things could build value if you know where you're at. But appreciate, appreciate the invite today.

[A]

No, yeah, it's great. You guys are obviously welcome anytime. It's nice to have people who are actually, I guess as we say in crypto in the trenches of this to answer the questions because often we get a lot of speculation and don't have anybody who can clearly define how this actually works. So appreciate you guys, hope you can come back more often. Matt, Mauricio, Lou, thank you everybody else who was here. Guys, we'll see you tomorrow. 10:15am Eastern Standard Time for the next crypto town hall. Have a good one.