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 Justin Sun is undoubtedly one of the most topical and controversial figures in the cryptocurrency world. He is both regarded as the "billionaire leader in the encryption field" and is also called "Sun Ge" by some. The controversial Justin Sun has started a "new gambling game." Not long ago, Justin Sun achieved a backdoor listing by injecting $100 million worth of TRX into SRM Entertainment. After the listing, Justin Sun changed the name of the shell company to Tron. Tron does not include Sun Yuchen’s Tron ecological assets, but only relied on the capital injection of US$100 million from TRX to transform into Tuncoin Company. With Strategy, a cryptocurrency stock that has doubled its value 30 times in four years, Tron quickly gained popularity in the market. On the day it announced its backdoor listing, Tron soared 647% overnight. However, Tron was only rich for a few days, and its high market value was not maintained for a few days. Tron began a long decline, and has fallen by 70% from its high point so far. Why is Tron only rich for a few days? How do you view its subsequent value? This article holds the following views: 1. Valuations are aligned with the industry level of crypto stocks: crypto stocks that focus on mainstream cryptocurrencies such as Bitcoin and Ethereum can usually enjoy a certain valuation premium. The market value of currency stocks that hold other cryptocurrencies is often the same as, or even lower than, the value of the currency they hold. After the current decline in Tron's stock price, its market value is not much different from the value of the TRX currency it holds. 2. The wave field that is not in the body will still affect the value of Tron. The share price of Tunbi shares rose and fell at the same time as the cryptocurrency holdings. The price of TRX held by Tron is not only affected by currency market sentiment and funds, but also by the wave field. TRX is the payment token of the TRON chain. Once the share of the TRON chain decreases, the demand for TRX will decrease and the currency price will also drop. 3. The sword of supervision hangs over the head. To a certain extent, the hedging of Tunbi shares transfers the risks of cryptocurrency to public market investors through the compliance channels of the capital market. In the context of the increasing number of Tunbi stocks, Tunbi stocks will most likely usher in stricter supervision, and relevant regulatory regulations have been introduced one after another. / 01 / A strange journey from toys to coins A change in a company's destiny only requires a decision from the boss. SRM Entertainment was originally a typical small and micro listed company in the United States. Its main business was making toy souvenirs for theme parks. Its annual revenue was millions of dollars, its market value hovered around US$10 million, and it was almost uninterested by investors. But looking at it from another angle, SRM is also a perfect "shell resource". Clean, simple business, low market capitalization. SRM was already being targeted by Justin Sun. Justin Sun gained control by injecting US$100 million in assets into SRM. After the transaction was completed, many executives closely related to TRON (the blockchain ecosystem company founded by Justin Sun) were appointed as SRM directors, occupying almost all key positions. SRM also changed its name and was renamed Tron. The best part about this deal is the payment method. Justin Sun’s $100 million injection of assets was not cash, but the equivalent value of Tron’s native token TRX. In this way, Justin Sun saved cash, and Tron transformed into a highly imaginative currency-tuning company. On the day when the backdoor listing was announced, Tron surged 647% overnight, and its stock trading volume exceeded Alibaba. Tunbi Company is popular because its performance is highly tied to the currency market. The business of Tunbigu is very simple, that is, listed companies raise funds through the issuance of stocks, preferred stocks, options, warrants and other financial means to buy cryptocurrency and earn profits from the increase in currency value. On the basis of the consensus that the currency market has risen, Tunbi stocks have fully enjoyed the dividends of the rising currency value. Strategy is the most typical example. Starting in 2020, Strategy allocated its own funds and various financing methods to Bitcoin on a large scale. The increase in buying orders also promoted the rise of Bitcoin, forming a "stock and currency boom". In the end, in just 4 years, Strategy’s market value surged from US$1.1 billion to 100 billion. Tron has also clarified its plan to accumulate coins after backdooring. It has applied to U.S. regulators and plans to raise up to US$1 billion in cash to accumulate coins by selling stocks, bonds, warrants, etc. However, unlike Strategy, Tron does not store Bitcoin but TRX. This allows Tron to earn a staking income in addition to the income from the increase in TRX. That is, Tron pledges the TRX it holds to the TRON chain and obtains an annualized income of 6% - 10% through the on-chain mechanism. Due to the different consensus mechanisms (game rules) between Bitcoin and TRON, there is no way to obtain staking income from Bitcoin. Although there is an additional amount of staking income, Tron is more dependent on the rise of TRX in terms of performance and value growth. First, the scale of staking income is small. Tron’s staking income in the second quarter was only about US$40,000, which is not worth mentioning due to currency fluctuations. Second, staking income also depends on the price increase of TRX. If the price of TRX drops sharply, the staking income will be cashed out in TRX because a lot of the income obtained will be reduced accordingly. So what is the future trend of TRX? / 02 / Fry Tron based on TRX Tron only experienced prosperity for a few days. After the surge during the backdoor listing period, Tron began to dive downwards and has now fallen 70% from its peak market value. Tron's decline is more likely to be the result of its valuation aligning with other crypto stocks after weathering market sentiment. In horizontal comparison, Strategy, as the cryptocurrency stock holding the largest number of Bitcoins, enjoys a certain premium, and its market value is about 1.5 times the value of its Bitcoin holdings. However, the market value of altcoin companies other than Bitcoin and Ethereum is not much different from the currency value. The market value of many companies holding non-mainstream tokens has even fallen below their net asset value. A typical example is Hyperion DeFi. The company's market value was once only half of the value of the currency it held. At present, the market value of Tron is not much different from the currency value of holding TRX, both are around US$100 million. After the valuation is aligned with the industry, Tron's stock price trend in the future will depend more on the value of TRX. In the bull market of the currency market, the price of TRX has increased by more than 142% in the past year. But starting from mid-August, TRX experienced a correction. At one point, it fell nearly 10% in a week. What will be the trend of TRX in the future? First, like most cryptocurrencies, TRX’s value still depends on overall sentiment and inflows. Recently, due to profit-taking by some institutions, multiple cryptocurrencies have experienced corrections to varying degrees since mid-August. However, in the long term, the price of cryptocurrency is affected by multiple factors such as policy guidance and capital flow, and there is great uncertainty in the future trend. However, unlike other tokens, the value fluctuation of TRX is not only affected by the currency market, but also related to the development of the TRON chain. Although the Tron chain ecology has not been incorporated into Tron by Justin Sun, Tron, as a public chain, can carry the circulation of a large number of cryptocurrency. Currently, TRON is the world's largest USDT circulation platform, and USDT accounts for more than 50% of the circulation on the TRON chain. When cryptocurrencies circulate on the TRON chain, the fee carrier that needs to be paid is TRX. This means that the huge and continuous cryptocurrency settlement demand within the TRON chain provides a "basic market" for the price of TRX. In other words, if the competitiveness of the TRON chain declines, it will also affect the value of TRX. At present, Tron Chain has certain competitive pressure. TVL is the core metric for measuring the influence of the TRON chain. It represents the total dollar value of all crypto-assets locked or deposited in the TRON chain by users. The higher the TVL, the more users and funds use Tron. Tron's TVL has dropped from US$7.3 billion at the beginning of the year to US$6 billion recently. Coupled with the recent net outflow of stablecoins on the Tron chain and the total daily trading revenue of TRX once falling to the lowest point in four years, various signs indicate that the Tron chain is facing increasing competitive pressure. The competitive pressure on TRON is that firstly, emerging public chains such as Solana are diverting TRON users with the advantage of low handling fees. Secondly, the emergence of a dedicated chain (Stable) that supports USDT has also brought certain competitive threats to TRON. From this point of view, although Tron is not in Tron, whether Tron can maintain its share will be related to the price trend of TRX, and thus determine the value of Tron. / 03 / The sword of supervision hangs over the head There is an interesting little detail about Tron’s backdoor operation. The only shareholder of the offshore company that originally purchased the shell company was Sun Weike. After the shell change was successful, Tron's chairman was also Sun Weike, and Sun Yuchen only served as a strategic advisor. Sun Weike is Sun Yuchen’s father. By asking his father to come forward, Justin Sun has built a legal "firewall" in an attempt to avoid direct scrutiny of himself by the U.S. Securities and Exchange Commission (SEC). In fact, the SEC has already filed a lawsuit against Justin Sun and Tron, accusing them of illegal sales of securities, fraud, and market manipulation. Although the lawsuit is currently on hold, it has not been withdrawn. Like a sword of Damocles, it always hangs over Tron's head and the investigation may be restarted at any time. Once the SEC resumes litigation, even if Tron has Sun Weike's legal "firewall", from a business perspective, it may still shake investor confidence and have an impact on Tron's stock price. In addition to the regulatory risks it faces, the entire Tunbi stock industry is shrouded in the shadow of regulation. At the beginning of the month, the first regulatory shot was taken. Nasdaq will require some companies to obtain formal approval from shareholders before issuing new shares to purchase crypto assets, and will need to disclose it to the market as soon as possible. For top crypto stocks, the impact of this regulatory requirement is relatively limited. After all, information such as the number of Bitcoins they hoard and their buying paths are traceable on the blockchain, making them highly transparent. Those that are more affected are those token stocks that are small in scale, have poor liquidity, low transparency, and are easily manipulated by the market. But in the long term, even the top Bitcoin stocks still have great regulatory risks. Tuning coins has become a new way to play in U.S. stocks. After Trump relaxed cryptocurrency regulations and Strategy took the lead, many stocks with poor performance and small market capitalization have used Tuning coins to push their stock prices as a shortcut to increase their market value. According to cryptocurrency consulting firm Architect Partners, 124 U.S. listed companies have announced plans to raise more than $133 billion to purchase cryptocurrencies in 2025. If you include previous coin-buying companies, there are already over 200 coin-buying companies in the U.S. stock market. However, the Tunbi stock model itself also contains huge risks, and it is highly dependent on market confidence and the continued rise in asset prices. It is like a chain that relies on continuous financing. Once there is a problem with the logic of currency value rise, it is easy to trigger a chain reaction and a vicious cycle of loss of financing capacity - forced reduction of holdings - price decline, and the biggest payers are investors. In other words, Tunbi shares actually transfer the risks of cryptocurrency to investors in the public market through the compliance channels of the capital market. Against this background, Tunbi stocks may face stronger supervision, or investment risks may become greater. After all, no asset will rise forever. The safest investment strategy is not to try to make the last copper.  Disclaimer: This article (report) is based on publicly available information or information provided by interviewees, but Read Finance and the author of the article do not guarantee the completeness and accuracy of such information. Under no circumstances shall the information or opinions expressed in this article (report) constitute investment advice to any person. |
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