🔥 SBET has risen over 95% in the last 5 days, how much longer can the ETH flywheel continue?

Question

@SharpLinkGaming This NASDAQ small-cap stock, which originally had a market capitalization of only about $10 million, has recently seen its stock price rise over 200% in just one month! The key driving force behind the stock price is a trap strategy centered around ETH known as the "flywheel effect." So, what exactly is the "ETH flywheel" model of SBET? Can this round of ETH rise bring about a new bull market? This tweet will answer your questions 👇

1/5 ⭐️ 1. Analyzing the "ETH Flywheel" Behind the Rise of SBET The big pump of SBET (SharpLink Gaming) stems from its multiple purchases of ETH, becoming a new player behind ETH. In simple terms, the company has established a self-reinforcing capital flywheel using ETH: buying ETH through stock financing ➡️ pushing up the stock price with the ETH market and story effects ➡️ then financing to purchase more ETH at a higher valuation, repeating the cycle and continuously expanding asset size. Breaking it down, this flywheel consists of three steps: (1) Low-cost fundraising for purchasing coins: In May this year, Ethereum co-founder Joe Lubin's ConsenSys and other crypto venture capital participated in the PIPE private placement of SBET, injecting $425 million at a price of $6.15 per share, allowing SBET to purchase approximately 163,000 ETH. (2) Market enthusiasm drives up stock prices: With the narrative of "Ethereum Treasury" supporting it, investors are pouring in wildly, and the SBET stock price is rapidly climbing. This psychological premium has caused the company's market capitalization to swell quickly. (3) Overvalued refinancing expansion: A significant rise in stock prices provides an opportunity for a new issuance. SBET can then sell new shares at high prices to raise funds and buy more ETH, repeating this process to create a snowball effect. Today, SBET has purchased a total of 32,892 ETH (approximately 115 million USD). As of now, SBET holds about 326,074 ETH, with a total value of approximately 1.14 billion USD. This scale of holdings has allowed SBET to surpass the Ethereum Foundation, becoming a new player in ETH, with a sudden increase in influence on the market. 2/5 ⭐️ 2. Review: From gambling marketing to Ethereum reserves, a "desperate battle" The strategic transformation of SBET is not coincidental. According to its 2024 financial report, SharpLink Gaming's annual revenue fell by 26.1% year-on-year, with sluggish growth in traditional gambling marketing business and pressure from losses prompting the company to seek new capital injections and diversified asset allocation. Against this backdrop, SBET has turned its attention to blockchain, announcing in February that it acquired 10% of the shares in the UK blockchain online gambling company CryptoCasino, and later partnered with ConsenSys in an attempt to achieve a breakthrough in business through the "Ethereum Reserve Strategy." 🤔 So, why does the market have confidence in SBET's ETH reserves? First, the "productive asset" attribute of ETH: Unlike Bitcoin's value storage attribute as "digital gold", Ethereum has a natural yield capability in staking and the DeFi ecosystem, and holding it is not just waiting for its price to rise. Bitcoin lacks such native yield mechanisms and relies more on price fluctuations. Secondly, fill the gap in traditional market ETH yield exposure: As of now, U.S. regulators have not approved any ETH staking ETFs, which means traditional market investors find it difficult to directly access the staking yield of ETH. However, SBET is expected to fill this gap by operating protocol-based strategies in collaboration with companies like Consensys, bringing considerable on-chain returns, and may even exceed the yields of future ETH staking ETFs. Finally, the option value brought by the higher implied volatility of ETH: Primitive Ventures believes that the implied volatility of ETH (69) is much higher than that of BTC (43), which creates a higher option value for convertible arbitrage and structured derivatives. This leaves room for imagination for SBET to conduct more complex financial operations in the future. 3/5 ⭐️ 3. How long can SBET's "infinite bullet" last? As the stock price soars, the valuation of SBET has significantly exceeded the net value of its held crypto assets, showing a premium of several times in terms of "mNAV" (market capitalization to net asset value). Currently, the estimated market capitalization of SBET is about 3.92 times that of the ETH value in the treasury, indicating that investors are supporting this with a huge narrative premium. In reference to the Bitcoin treasury stock MicroStrategy, which reached a market capitalization/net asset ratio of approximately 4.5 times at the peak of the market. This also means that the valuation model of SBET may still have the potential to approach upwards in an optimistic scenario. (Note that this comparison method may be affected by reflexivity and is for reference only. @Joylou1209 A new calculation approach is proposed here, x.com/Joylou1209/sta… ) The calculation process in the figure below is based on the currently purchased ETH, not on future expectations for SBET. If we consider an additional 5 billion ATM, the estimated future mNAV of SBET can refer to @0x_RayBTC: x.com/0x_RayBTC/stat… At the same time, one must also consider how long this flywheel model can continue to sustain itself. On one hand, we discussed earlier the core logic behind the current rise of SBET, which revolves around the "flywheel effect" built around ETH. The key is the growth of the core variable "per share ETH content = total ETH quantity of the company / total share capital." So, theoretically, if the price increase of SBET > the price increase of ETH, this is the most favorable situation: the stock price rises quickly, and the company can raise more cash with fewer shares; the ETH price rises slowly, making it relatively cheap to buy. The result is that new financing can buy more ETH, increasing the ETH content per share, and the flywheel accelerates. On the other hand, this model cannot actually be sustained indefinitely, and there are two main potential adjustment risks: The growth rate of ETH per share is slowing: As the total shares continue to expand, even with continuous purchases of ETH, it is difficult to maintain a high growth rate of ETH Concentration. Once the growth rate of ETH per share declines, the market's expectations for its future growth will weaken, and the valuation premium may subsequently retreat. ETH Price Correction Risk: The asset value of SBET is highly dependent on ETH. Once the ETH price corrects, market risk appetite declines, and the valuation system will face redefinition, leading to synchronous adjustments in stock prices. Especially in a downtrend, if the decline of SBET > the decline of ETH, the risk is the greatest.

4/5 ⭐️ Four, Outlook for ETH's Future Market: Flywheel Accelerating, Is the Bull Market Far from Over? The big pump of SBET is essentially a pre-pricing of the future value of Ethereum, and the subsequent performance of ETH will directly determine whether the "flywheel" of SBET can continue to operate. Here are some recent positive news about ETH for your reference:

The largest regulatory benefit and policy introduction in history: Last night, the U.S. House of Representatives passed three legislative proposals regarding the regulation of cryptocurrencies, including stablecoins, with an overwhelming majority of votes. Among them, the "GENIUS Act" provides a clear framework for the issuance of stablecoins, solidifying ETH's position as the infrastructure for stablecoins. In addition, a recent U.S. court case explicitly stated that ETH is a commodity rather than a security, and this "non-security" status reduces regulatory uncertainty. This is crucial - it means that the legal barriers for institutional investment in ETH are lowering.
Institutional funds influx: With clearer regulations, the inflow of funds into ETH trading products in the North American market has been hitting new highs. According to statistics, on July 17 alone, the net inflow of the US spot ETH ETF reached as high as $779.6 million, setting a historical record. This also indicates the institutional demand for ETH allocation, with funds accelerating towards the ETH market.
Ethereum Pectra upgrade rapid advancement roadmap: The Pectra upgrade (Prague + Electra hard fork) launched on May 7, 2025, raised the staking limit for a single validator to 2048 ETH and recalibrated fees to significantly improve Layer-2 throughput, while also supporting account abstraction. Vitalik Buterin and Ethereum core developers are also actively promoting an increase in Gas Limit and ZK integration, with the future TPS of ETH expected to exceed three digits.
Expected favorable macro environment: As the inflation rate in the United States declines, the market predicts that the Federal Reserve is likely to start the interest rate cut process in 2025-2026. The downward trend in interest rates means that traditional risk-free yields are falling, which highlights the relative attractiveness of ETH staking yields. 5/5 Regardless, the strong fundamentals of ETH provide fuel and imagination for the market capitalization of SBET, and to some extent, determine the ceiling for SBET's valuation. Currently, Ethereum is in a "positive flywheel" of multiple favorable factors. The value of ETH as a "productive asset" is being re-recognized and re-priced by the market. Its on-chain yield mechanism, scarcity, and the future process of institutionalization all provide strong upward momentum. Do you all think that this round of rise in ETH can support the start of a new bull market? Feel free to leave a comment to discuss! 👏 ⚠️Risk Warning: Pay attention to the slowing growth rate of each share of ETH and the risk of ETH price correction.