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Key Insights:
- Metaplanet stock price has crashed into a bear market this month.
- It has crashed as the Bitcoin price remains in a tight range at $118,000.
- The decline is also likely due to the ongoing profit-taking.
Metaplanet stock price remains in a deep bear market after falling nearly 40% from its highest point this year. It has plunged to the crucial support level at ¥1,200 as the recent crypto market rally fades. This article explores why it has plunged, even as Bitcoin hovers near its all-time high.
Metaplanet Stock Price Has Crashed as Bitcoin Stalls
Metaplanet, like Strategy, has become a proxy for Bitcoin because of its continued accumulation. It bought 780 coins last week, bringing its total hoard to 17,132. At the current Bitcoin price of $118,000, its holdings are worth over $2 Billion.
Therefore, the Metaplanet share price has declined due to the recent Bitcoin price action. After soaring a record high of $123,200 earlier this month, the coin has pulled back to $118,000.
Historically, Bitcoin treasury companies have pulled back when it is rising. It then dropped when it was either falling or consolidating.
Fortunately, there are indications that Bitcoin is poised for a significant surge in the coming days. It has formed a bullish pennant pattern on the daily chart and remained above the 50-day and 200-day EMAs.
Therefore, a bullish breakout will be good for Metaplanet stock as its Bitcoin holdings will be worth more.
Valuation Concerns Have Remained
Another possible reason the Metaplanet stock price has crashed is the view that it is highly overvalued. One of the best approaches to valuing a Bitcoin treasury company is to examine its net asset value (NAV).
In this case, one compares its market capitalization and the valuation of its Bitcoin holdings. Metaplanet has an over $5 billion valuation, while its Bitcoin holdings are worth $2.01 Billion. It has a NAV multiple of 2.7.
In contrast, Strategy, the OG of the Bitcoin treasury approach, has a NAV multiple of 1.581. Other companies that have embraced this strategy have a multiple of less than 2.
MARA Holdings, the second-biggest Bitcoin treasury company, has a NAV multiple 0.99. On the other hand, CleanSpark and Riot Platforms have multiples of 2.
Therefore, the Metaplanet share price is falling as its valuation bridges the gap with other Bitcoin treasury companies.
Bitcoin Treasury Industry is Getting Crowded
Metaplanet stock price is also falling as the Bitcoin treasury industry becomes crowded. A CryptoQuant report on July 1 noted that only 51 companies had added Bitcoin to their balance sheet.
The number of Bitcoin treasury companies has also increased to 100 as of July 29. It’s a trend that may continue in the coming months. Some of the newest entrants include The Smarter Web Company, Sequans Communications, and Volcon.
The crowded space also explains why Strategy stock remains much lower than its all-time high. It was trading at $395, down from the record high of $541.
Metaplanet Share Price Has Crashed Because of Profit-Taking
Furthermore, Metaplanet share price has likely plunged due to profit-taking. It jumped by over 9,490% from its lowest point in 2024 to its highest on July 18.
It is common for a stock or an asset that has surged sharply to pull back as investors start to book profits. Technically, this pullback is known as mean reversion. An asset often returns to its historical averages after a strong surge.
In Metaplanet’s case, it remains much higher than its historical averages. Its stock stands at ¥1,200, much higher than the 200-day moving average of ¥750.
Metaplanet stock price has pulled back in the past few months, even as Bitcoin jumped to a record high. This retreat is likely because of the ongoing profit-taking, Bitcoin consolidation, and mean reversion. Also, the Bitcoin treasury industry has become crowded.
Disclaimer
This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.
