Author: Nancy, PANews
A convenient window for trading US stocks is being opened by CEXs (centralized exchanges).
As crypto platforms aggressively enter the US stock market to seek profits, market liquidity and asset allocation logic will be reshaped, and the flow of funds, trading rhythm, and innovation culture in the crypto world are also reshaping TradFi assets.
A fringe stock on Wall Street was hyped up like a Meme coin.
When US stocks were brought into the crypto world, crypto players, who were used to high volatility and short-term speculation, simply copied this familiar approach.
On June 1st, Binance, the world's largest cryptocurrency exchange, officially launched its US stock trading platform. On the first day, a rather unusual phenomenon quickly attracted market attention: the most actively traded stocks were not all blue-chip stocks, but rather a large number of relatively unknown small-cap, micro-cap, and even nano-cap stocks. For example, stocks like WOK, ZCMD, ANY, and ABTS all saw daily trading volumes exceeding $100 million, becoming popular targets on Binance's US stock section.
These marginal assets, long overlooked by mainstream investors, have suddenly become the targets of crypto funds. Many crypto enthusiasts see these low-market-cap stocks as essentially no different from Meme coins: small circulating supply, high price elasticity, and easy to generate market attention. They believe that with enough attention and capital, they can easily become "lottery winners." However, this logic fails miserably in the US stock market.
Take WOK Medical, a typical nanotechnology stock with a market capitalization of less than $200,000, as an example. It received a delisting warning from Nasdaq due to its share price remaining below $1 for an extended period. Although the company has repeatedly maintained its listing status through reverse stock splits, fundamental pressures have persisted. After Binance listed WOK on the US stock market on June 1st, it unexpectedly became the most traded stock on the platform, with a single-day turnover approaching $400 million.
A large influx of crypto funds occurred, with some players even jokingly saying they wanted to "buy themselves into a major shareholder." However, players quickly discovered that the stock price, after a brief surge, rapidly declined. The reason was that WOK held a massive amount of "ammunition," having already expanded through shareholder meetings and registered with the SEC to issue new shares at market price for further dilution.
ZCMD, another company that has been heavily speculated on, is also a high-risk micro-cap shell stock. The company has a near-unlimited ability to issue new shares through a huge authorized share capital expansion approved by the shareholders' meeting, an effective F-3 off-the-shelf registration, and a multiple reverse split mechanism authorized by the board of directors.
For crypto investors who are unfamiliar with the rules of capital operations in the US stock market, they can easily become fuel for market liquidity.
Cryptocurrency investors flood US stock market, escalating risks and cultural clashes.
CEX's foray into the US stock market has opened up an unprecedented asset pool for crypto users. But the larger the pool, the deeper the water.
From a risk perspective, the US stock market is actually composed of different tiers. At the top are the Nasdaq and NYSE main boards. This tier houses the vast majority of mature listed companies, which must meet strict requirements regarding market capitalization, revenue, profitability, or cash flow, and are subject to dual regulation by the SEC and the stock exchange. Information disclosure is relatively comprehensive, institutional investor participation is high, and issuing more than a certain percentage of shares usually requires shareholder approval, resulting in a high level of market transparency and governance.
The middle tier consists of nano-cap and ultra-small-cap stocks with market capitalizations below tens of millions of US dollars. Although still listed on the main board, many of these companies face long-term delisting risks. After their stock prices remain below the standard, they often enter a rectification period, frequently employing a "dead cat bounce" or a pre-delisting pump-and-dump scheme to reap profits.
The highest risk is found in the OTC pink sheets market. Listing requirements are extremely low, information disclosure is limited, liquidity is scarce, market makers have significant influence, and stock price manipulation and speculation on shell companies are common.
At the very bottom is the OTC pink sheet market, where there are almost no listing thresholds, no restrictions on additional share issuance, no strict delisting mechanism, shell companies are rampant, market makers have serious control, information disclosure is extremely poor, liquidity is poor and manipulation is frequent.
Despite the significant reduction in trading barriers for US stocks, it's easy to fall into traps if you don't understand the regulatory frameworks, financing mechanisms, and equity dilution rules behind different market tiers.
However, from another perspective, the crypto community is bringing its trading logic into the US stock market. In the eyes of traditional investors, the value of a company mainly depends on its revenue, profit, cash flow, and growth prospects; but traders who have grown up in the crypto market pay more attention to the size of the circulating supply, market popularity, community consensus, and price elasticity.
This differentiation is changing the pricing logic of traditional assets. In particular, some previously overlooked fringe stocks are beginning to attract capital inflows and market attention beyond their fundamentals. To some extent, this is not only a fusion of the crypto and TradeFi markets, but also a clash between two financial market cultures.
Starting with buying US stocks, CEXs embarked on a new growth curve.
While the stock market next door is booming, liquidity in the crypto market is dwindling. As more and more exchanges list traditional financial assets such as US stocks, this will have a certain draining effect on the crypto market in the short term.
Especially given the current weakness in Bitcoin, Ethereum, and most altcoins, the flow of funds from high-risk assets to more certain assets is a natural choice in the capital market.
From the perspective of CEXs, listing US stocks is significant far beyond simply adding a new trading instrument. As one of the world's largest asset pools, US stocks attract the largest amount of capital, the most mature liquidity, and the most attention. For exchanges, listing US stocks is essentially about vying for users, fund retention rates, and access to global capital flows amidst slowing industry growth and increasingly fierce competition.
In the short term, this may not be a particularly attractive business. Over the past few years, CEX revenue has heavily relied on high volatility, high turnover, and high leverage trading, while traditional financial investors tend to prefer long-term holding, low-frequency trading, and asset allocation. Even if a large number of users start buying and selling US stocks through exchanges, it will be difficult to replicate the growth curve seen during the crypto bull market.
What truly deserves attention is the potential of CEXs to convert TradeFi users and expand their ecosystem. Once traditional financial users open an account on a crypto platform for the first time and buy US stocks with stablecoins, their migration costs are significantly reduced. From buying stocks to holding stablecoins, and then to engaging with crypto assets and participating in crypto products or on-chain applications, exchanges can gradually convert this group into crypto users.
To retain these new funds, exchanges will also innovate more around US stock assets. For example, Binance plans to launch bStocks, which essentially transforms traditional stocks into on-chain programmable assets. Users can use these as collateral for lending, invest in liquidity pools to earn returns, combine them into structured products, and even develop new derivative strategies around them. This will not only significantly increase user stickiness for exchanges but also open up new revenue streams for the platforms.
Overall, the collective entry of CEXs into the US stock market represents a significant turning point in the history of crypto development.
