Jeff’s Note: There’s usually more to a story than meets the eye.
Would you believe it if I told you I’m walking on water in the below photo?
Large swaths of Redoubt Bay in Alaska are carpeted with vegetation so thick that you can easily walk on top of it. I took off my shoes and socks and enjoyed the stunning weather walking across the water.
But beneath the growth is an entire underwater world teaming with discoveries. Just the sort of environment my team and I thrive in.
We relaunched Brownstone Research a year ago, and this week I’m up in Alaska with my family taking a much needed mental break after an intense 12+ months of rebuilding. We have so much more coming in the second half of the year… and if what I’m researching rolls out as expected, we are going to enter a growth phase in the markets – especially the tech markets – like nothing we’ve seen before.
One of the most interesting corners of the markets is the topic of discussion today. As we’ve been covering right here in The Bleeding Edge, stablecoins are a major segment of digital assets and cryptocurrencies that are shaping up to play a major role in the Trump Administration’s financial reform plans.
Today’s topic – an obscure trend known as DATS – are also adding fuel to the demand for digital assets. But of course, no one would know about these sorts of discoveries – or how to invest in them – if they didn’t know where to look.
Fortunately, we do. Here’s my Senior Crypto Analyst Ben Lilly to explain…
On July 11, the Ethereum Foundation sold 10,000 ETH.
The Ethereum Foundation (EF) is a nonprofit that was established when Ethereum launched in 2014. It holds a major sum of ETH, and its mission is to help sponsor Ethereum development.
Whenever the Ethereum Foundation sends ETH to an exchange, the transaction is notable.
Its July 11 sale of 10,000 ETH amounted to the rough equivalent of $35 million, based on an average price of $3,500 per ETH.
Historically, the Ethereum Foundation’s moves are notoriously associated with local tops in the market.
Here’s a chart showcasing how great its timing can be. It shows the price of ETH from 2017 to its all-time high in 2021. The blue dots denote major sales by the Ethereum Foundation… and annotations of the number of tokens sold by the foundation.
Impressive.
And with its latest sale, some have been worried that history will repeat.
But this time is different.
That’s because the transfer didn’t hit the open market. It was sold over-the-counter (OTC)… to an entity that represents the biggest shift for Ethereum and the market ever.
And the timing is no coincidence.
President Trump just signed the GENIUS Act into law. It’s a historic piece of legislation that brings regulatory clarity to stablecoins.
Recall that stablecoins are a subset of cryptocurrencies, designed to maintain a stable value by being pegged to another asset, such as a fiat currency like the U.S. dollar, a commodity like gold, or even other cryptocurrencies, making them less volatile than typical cryptos like Bitcoin.
And not far behind this historic piece of legislation is the Clarity Act, another bill that lays down the foundation for the digital asset industry. It has already passed the House of Representatives.
While these pieces of legislation moved through Congress over the last two weeks, ETH went on a tear, rising more than 50%. Most think this was due to the passage of legislation, but that would be short-sighted.
The truth is… The entity that purchased the Ethereum Foundation’s 10,000 ETH has been buying hundreds of thousands of ETH.
It’s as if the entity is frontrunning the legislation that will bring public blockchains like Ethereum to the main stage.
What’s more, this entity triggered a monumental shift that is taking the digital asset world by storm.
But who is it? Let’s unpack this entity and the trend it just kicked off for the entire crypto market.
The entity behind the Ethereum Foundation purchase was SharpLink Gaming.
A gaming company?
SharpLink is a Nasdaq-listed company known for online marketing. It has focused on driving traffic to local sports betting and casinos.
The stock never garnered much attention. Its average daily trade volume in 2024 was around 11,000 shares per day. Nvidia, in comparison, saw about 400 million shares traded per day.
That’s pretty abysmal considering the stock was less than $10 a share while Nvidia was in the $100s.
But on June 2, SharpLink announced a $425 million private placement, led by Consensys Software. Consensys is one of the largest private firms of blockchain developers. It builds infrastructure for Ethereum, such as the most widely used blockchain-based wallet – MetaMask.
The announcement came with a caveat. SharpLink will use the proceeds to launch a treasury strategy focused on Ethereum. This means the company will purchase ETH… and hold it like a treasury.
This practice refers to a common corporate finance strategy, where a company like SharpLink Gaming treats Ethereum (ETH) as a primary reserve asset on its balance sheet – similar to how traditional companies hold cash, bonds, or other stable assets in their treasury for long-term financial stability, liquidity, and value preservation.
Meanwhile, the valuation of the company will be directly tied to the value of its holdings.
What’s more, these entities tend to trade at a premium to the assets they hold, which makes them a unique upside play.
SharpLink is the first Nasdaq-listed company to take this step for ETH.
Things have gotten interesting…
Eleven days after SharpLink acquired 10,000 ETH from the Ethereum Foundation, the company dropped an announcement that it had acquired 176,270 ETH.
The company wasted no time filling its treasury coffers.
It also managed to sell equity to raise an additional $79 million.
If we fast-forward to now, SharpLink now holds 280,706 ETH – over $1 billion – including the 10,000 ETH from the Ethereum Foundation on July 11.
And at the time of the most recent update in holdings, the company also announced it had $257 million still to be deployed. This was July 13.
The pace of buying has never been seen before in history.
And it’s still just getting started. That’s because on July 17, SharpLink announced a $1 billion offering in order to purchase even more ETH.
Assuming the $1 billion goes toward buying ETH at an average price of $3,500 per token, that would push the company’s holdings north of 566,000 ETH, placing it near $2 billion worth of ETH. And before this even takes place, SharpLink already holds more ETH than the Ethereum Foundation.
It’s an astounding sum.
To put this in perspective, the Ethereum network realizes around 650 ETH spent in transaction fees per day. SharpLink’s holdings represent nearly 2.5 years of network demand in the span of weeks.
This is a major demand shock, unfolding in real-time.
But that’s not all…
SharpLink is not the only company running this strategy.
It has kicked off a shockwave of copycats that understand how attractive ETH as an asset becomes thanks to recent legislative efforts.
BitMine Immersion Technologies joined the fun two weeks after SharpLink made its pivot in June.
The announcement came with $250 million in funds to purchase ETH, in order to become the largest publicly traded ETH holder. It wants to compete with SharpLink for the title of number one.
And it already holds more than $1 billion of ETH, which comes to more than 300,000 tokens – more than SharpLink has announced to date.
It’s a mad dash to see who can acquire the most ETH in the shortest amount of time.
We’ve never experienced something like this, except with Michael Saylor’s MicroStrategy (MSTR), a publicly traded company that’s been running the same playbook with Bitcoin. Its shares are up 10x in two years and now trade at a $123 billion market cap. It holds more than 600,000 Bitcoin.
MSTR is a great way for institutions that don’t want to hold the underlying asset (Bitcoin) but still want exposure, as well as some additional upside. MSTR trades at a premium to the amount of Bitcoin on its balance sheet.
We call these corporate treasury companies DATs, or digital asset treasuries.
And just like MSTR became the darling for Bitcoin, we’re about to see SharpLink and Bitmine follow for Ethereum (ETH). It’s also why these companies make compelling investment opportunities, as they show no signs of slowing down – especially with the assets they hold rising at such an incredible pace.
But more importantly, it’s why ETH is up about 50% since SharpLink and BitMine entered the arena, with more popping up each week.
We can view DATs as equity markets attempting to equitize crypto. Just as crypto looks to tokenize equities.
It’s a fascinating dynamic, and the timing is no coincidence.
Ethereum is home to stablecoins, with more than 55% of all stablecoins on its blockchain.
But not all supplies of stablecoins are alike.
That’s because most networks tend to transact stablecoins like a payment network. The stablecoins don’t get used for lending and borrowing, generating yield, or being parked on various applications and protocols on the network.
When we look at the supply of stablecoins in terms of being used on the network, Ethereum – and its ecosystem of “layer-two networks” (i.e., Base, Arbitrum, Optimism) – is suddenly responsible for more than 85% of stablecoins being used.
This is crucial to grasp.
Stablecoins sitting on Ethereum get used throughout the ecosystem. This makes it more akin to an economy springing up on-chain.
And that creates more investable opportunities.
We can think of this like capital in an economy being used to invest in other businesses… or being deposited into a bank, which can turn around and write more loans. It’s a setup that gives rise to a growing economy and ecosystem.
It’s this reason that Wall Street associates stablecoins with Ethereum. And it’s why DATs like SharpLink and Bitmine can attract such large swaths of capital to secure this valuable asset.
This is happening ahead of the Clarity Act, which is the catalyst for all of this activity. With the passage of this bill, these applications and protocols will have the regulatory guidance they need to thrive, kicking the economy taking root on Ethereum into high gear.
Projects have been throttled by the U.S. government for years. Projects like Polymarket, MetaMask, Coinbase, OpenSea, and many others have been subpoenaed or taken to court by the SEC. Those cases were dropped earlier this year.
And now, the framework that the digital asset ecosystem has been waiting for is set to drop in the coming months.
The market is racing to get ahead of it. That’s why these DATs are such a hot commodity right now.
The imminent passage will spark a run on the protocols and projects that are harnessing this stablecoin trend, spurring growth that will likely top what we’ll see in the equities market.
That’s why last week, Brownstone founder Jeff Brown held a special event, where he recommended projects best positioned for this trend.
If you missed it, you can access the replay here.
In the meantime, these DATs will continue to spark a frenzy that will ignite the entire cryptocurrency market.
The time to be positioned is now – we need to prepare for what Treasury Secretary Scott Bessent says is a $3.7 trillion opportunity over the next four years.
Your Pulse on Crypto,
Ben Lilly
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
