London small-cap stocks soar! The Bitcoin reserve craze sweeps UK-listed companies, with Tao Alpha rising by as much as 1200%.

Gate news, following MicroStrategy's lead, Bitcoin is becoming the "new favorite" on the balance sheets of more and more companies. This trend has spread from the United States and Japan to the United Kingdom, with small listed companies on the London Aquis exchange becoming new players, and their stock prices have experienced a big pump, but there are also huge risks hidden...

Bitcoin corporate reserve craze spreads to London

The global trend of "Bitcoin corporate reserves" is intensifying. Following the lead of the American software giant Strategy (formerly MicroStrategy), which has spent a staggering amount to accumulate over $64 billion worth of Bitcoin in the past five years, this craze has quickly swept the world. From Japan's Metaplanet to the United States' Trump Media ( and GameStop ), numerous companies are following suit.

Now, this wave has reached the City of London. In recent months, a group of small companies listed on the London Aquis exchange have successively announced the inclusion of Bitcoin into their corporate reserve strategies, triggering a strong market reaction and dramatic stock price fluctuations.

The "Bitcoin Effect" of UK Small Cap Stocks

The market response of these UK companies that announced their embrace of Bitcoin can be described as "crazy":

1. AI Service Group Tao Alpha: According to the Financial Times, the company plans to raise £100 million specifically for increasing its holdings of Bitcoin. Following the news, its stock price surged over 1200% in a short period (although it significantly fell back a week later). This indicates the market's frenzied pursuit of "Bitcoin concept stocks."
2. Website design company The Smarter Web Company: After announcing a strategic shift to Bitcoin in April this year, its valuation skyrocketed from a mere £4 million to over £1 billion in just a few weeks, showcasing an astonishing market value leap.
3. Precious Metal Miner Bluebird Mining: Even traditional mining companies are joining the ranks. The company raised £2 million through debt issuance to launch its Bitcoin reserve plan. The company vividly describes its strategy as "converting (physical) gold into digital gold", meaning it plans to continuously invest mining revenues into Bitcoin. Its stock price has risen nearly 400% compared to a month ago.

These cases clearly demonstrate the strong short-term stimulating effect of announcing holdings or plans to increase Bitcoin on the prices of some London small-cap stocks.

The Huge Risks Behind the Glamour

However, financial analysts are sounding the alarm, pointing out that this strategy carries significant high risk:

1. "Premium Engine" Downtime Risk (MicroStrategy Model Bottleneck):
   • Pioneers represented by MicroStrategy rely on a key premise: the company's stock price must remain consistently above the net value of its Bitcoin holdings per share (i.e., net asset value - NAV).
   • This stock price premium enables the company to raise funds through issuing new shares, and then use this capital to purchase more Bitcoin, creating a cycle.
   • However, once market sentiment reverses and stock prices fall to or even below their Bitcoin net asset value (NAV), this "arbitrage engine" will completely shut down. At this point, issuing more shares will only lead to severe dilution of shareholder equity, which is not worth the cost. VanEck's Head of Digital Asset Research, Matthew Sigel(Matthew Sigel), warned: "Once you trade at net asset value, the dilution of shareholder equity is no longer strategic but erosive."
2. Survival Crisis of Small and New Companies:
   • For smaller companies like Tao Alpha, The Smarter Web Company, and Bluebird Mining that have just joined the ranks of Bitcoin reserves, the challenges are even more severe.
   • They lack the market reputation and performance record of MicroStrategy, and when they need financing to purchase more Bitcoin, they may be forced to rely on higher-risk debt instruments, or face extremely harsh financing terms.
   • The most deadly risk is: if the price of Bitcoin crashes, or if the market loses confidence in the "corporate holding" model, these weaker companies may be forced to sell Bitcoin at low prices to exchange for the cash needed for survival, resulting in actual losses and even triggering a bankruptcy crisis.
3. Real Warning: The Predicament of Semler Scientific: The publicly listed company Semler Scientific in the United States has already tasted the bitter fruit. The company's stock price has plummeted significantly this year, leading to its financing channels being nearly cut off, severely limiting its ability to continue increasing its Bitcoin holdings. This serves as a living risk warning case for future entrants.

Conclusion

The trend of Bitcoin as a corporate reserve asset is expanding, with a small listed company in London becoming the latest participant and experiencing a dramatic rise in its stock price as a result. The model of Strategy demonstrates potential advantages in a bull market, but its core relies on a fragile stock price premium.

For weaker followers, especially those companies whose stock price surges are more due to "concept speculation" rather than solid foundations, the risks are geometrically magnified. The extreme volatility of Bitcoin prices, the fragility of financing channels, and the potential reversal of market confidence could all become the last straw that breaks them. Investors chasing the astonishing rise of these "Bitcoin concept stocks" must be acutely aware of the huge risks lurking behind them. Is a company embracing Bitcoin innovation or gambling? Time will provide the answer, but it is always wise to act cautiously.