Metaplanet stock price remains under intense pressure as investors sour on Bitcoin treasury companies and its Bitcoin premium slips. It was trading at ¥680 on Thursday, down by 65% from its highest level this year.
The stock is about 21% above the lowest level this week. This article explores the top reasons why Metaplanet shares have plunged this year.
Metaplanet stock plunge is part of a growing challenge
One reason why the Metaplanet share price has plunged is that the entire Bitcoin treasury industry is struggling. Strategy, the company started by Michael Saylor, has seen its stock plunge by 30% from its highest point this year.
Similarly, Trump Media (DJT) stock price has plunged by over 60% from the year-to-date high and is hovering at its lowest level in months. Other companies, such as Bullish, KindlyMD, and American Bitcoin, have all plummeted.
Metaplanet stock has dropped as the company’s funding “flywheel” appears to break. The concept of a flywheel in Metaplanet’s case involves the Evo Fund. In this, Evo received moving strike warrants, giving it the right to buy Metaplanet shares at a pre-set price.
If the stock rise above the strike price, the Evo Fund exercises the warrants at a profit, giving the cash to Metaplanet, which it uses to buy Bitcoin. Recently, however, the stock has plunged, meaning that the amount Metaplanet uses to buy BTC has dwindled.
To address this situation, the company announced its initial overseas share offering at ¥553, a 10% discount from the initial price. It will raise ¥204 billion, most of which will be used to buy Bitcoin.
Therefore, the funding challenges mean that the company may struggle to hit its target of buying 210k coins in the long term. It now has 20,136, meaning that it needs to buy 189,000 to get to its goal. At the current price of $113,000, it needs to raise over $21 billion.
Valuation concerns remain
Metaplanet stock price has also plunged as investors raise concerns about the valuation of Bitcoin treasury companies. In Metaplanet’s case, it has a market capitalization of $4 billion compared to its Bitcoin holdings value of $2.3 billion. Including its debt and cash, the company’s enterprise value stand at $5 billion.
These numbers indicate that the company has an mNAV of 1.64, lower than the year-to-date high of 8. Some investors question why these companies trade at a premium and all they own is Bitcoin, which is readily available.
Furthermore, Metaplanet shares have plummeted as the entire treasury industry has become oversaturated. There are now over 170 companies with Bitcoin holdings. More companies have launched altcoin-focused treasury strategies, with Tom Lee’s BitMine holding Ethereum coins worth over $8 billion.
Metaplanet stock price technical analysis
The daily timeframe chart shows that the Metaplanet share price has plunged in the past few months, moving from a high of ¥1,962 in June to ¥672 today. It has plunged below the 50-day Exponential Moving Average (EMA).
It has retested an important level, which was its highest level in February this year. This break-and-retest pattern is one of the most common bullish reversal signs.
The stock has also formed a falling wedge pattern, which comprises of two falling and converging trendlines. Also, the MACD and the Relative Strength Index (RSI) are showing signs of a bullish divergence.
Therefore, the most likely scenario is where the stock rises, potentially to the 50-day Exponential Moving Average (EMA) at ¥969 and then resumes the downtrend.
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