It all started with MicroStrategy. Nowadays, it seems that a new publicly traded company announces the accumulation of Bitcoin or other cryptocurrencies every week.
But there is a problem here: investors are willing to give these companies a high valuation premium simply because they are buying Bitcoin.
What will happen if their stock does not rise as a result?
Taking Japan's Metaplanet company as an example, it replicated Michael Saylor's Bitcoin frenzy at MicroStrategy.
10xResearch stated that its stock price is calculated based on the trading price of Bitcoin at $596,154.
This is five times the current price of Bitcoin at about $106,000.
Before the company fully invested in Bitcoin, Metaplanet was an economy hotel operator that later transformed into a blockchain infrastructure provider.
With the company's rebranding and transformation into a Bitcoin reserve company, these operations have been put on hold.
10xResearch wrote in a report on May 27th: "Is it time to short? The signals we are seeing now are very similar to past turning points."
One of many companies
In fact, Metaplanet is one of the many companies following in the footsteps of Saylro, which has now been renamed to Strategy.
On May 27, Trump Media & Technology Group (TMT) announced plans to raise $2.5 billion to purchase Bitcoin.
This week, the video game retailer GameStop, which has gained fame for becoming a "meme stock," purchased 4,710 bitcoins, valued at approximately $513 million (based on current prices).
The stock prices of both companies have fallen.
These new Bitcoin reserve companies have adopted a relatively simple strategy: raising funds by issuing convertible bonds and then using the money to purchase Bitcoin in large quantities.
Why have so many people suddenly emerged to emulate Saylor? In short, it has proven effective for companies.
Since the implementation of the Bitcoin purchase plan in August 2020, the stock price of Strategy has increased tenfold. The company holds over 576,000 bitcoins, worth approximately $63 billion.
Act with caution
But skeptics argue that there are good reasons to remain cautious.
First of all, the idea that hoarding Bitcoin or any other cryptocurrency on a company's balance sheet is a surefire way to profit is simply nonsense.
Renowned macro analyst Noelle Acheson stated that those who follow Saylor firmly believe that this strategy is risk-free, which is concerning. "Especially those who enter the market when Bitcoin prices are high."
When Strategy first purchased Bitcoin, the trading price was about $11,000, which is only about one-tenth of the current $107,000.
As this strategy becomes increasingly popular, analysts and seasoned investors may focus attention on a specific metric to filter out the noise—namely, the Net Asset Value (NAV).
NAV refers to the book value of the assets held by the company.
When there is a mismatch in NAV, it means that the company's stock price does not align with the actual value of its held assets.
Take Metaplanet as an example.
The company holds approximately $830 million worth of 7,800 bitcoins. However, the company's market value is $5.6 billion, which means one bitcoin is worth $596,154.
In other words, the price that investors pay for indirect investment in Bitcoin is five times the price of Bitcoin itself.
10xResearch analysts stated, "A dangerous NAV distortion is quietly forming."
"We should restrain our enthusiasm for such gimmicks." — Noelle Acheson
This means that Metaplanet's stock price (which has risen 233% this month) could reverse its trend at any time.
But don't forget about the Strategy. Its frequent premium may be beneficial to shareholders, but it is also concerning.
According to Strategy Tracker data, in 2020, investors valued Strategy stocks at more than six times their Bitcoin value, which exceeded three times their value last year.
Hedge fund experts like legendary short seller Jim Chanos have been shorting Strategy by taking advantage of the NAV mismatch phenomenon and buying more Bitcoin.
insider selling
At the same time, cryptocurrency reserve strategies are gaining significant momentum.
Just this week, Trump Media & Technology Group (TMT), the parent company of Trump's social media company, plans to raise $2.5 billion to invest in Bitcoin. However, after disclosing the plan, its stock price plummeted by 11%.
Why? Some people may worry that insiders will sell their shares.
The company stated that potential future stock sales may include shares from some insiders, such as the trust controlled by its son, Donald Trump Jr., which holds 57% of the company's shares.
At the same time, many companies that emulate Saylor (some of which are not even cryptocurrency companies) have their valuations entirely dependent on the amount of Bitcoin they hold.
Semler Scientific manufactures medical devices. After purchasing 581 bitcoins, its stock price soared by 30%.
Strive Asset Management, founded by former presidential candidate Vivek Ramaswamy, announced that it has raised $750 million for the purchase of Bitcoin, with another $750 million in preparation.
The technology company ASST announced its merger with Strive Asset Management, transforming into a Bitcoin reserve company, and its stock price subsequently rose by 194%.
A new startup called Twenty One, led by Bitcoin evangelist Jack Mallers and supported by Tether, SoftBank, and Cantor Fitzgerald, has the sole purpose of absorbing as much Bitcoin as possible.
The holding company named Cantor Equity Partners has seen its stock price rise by over 300% since its establishment at the end of April.
The company listed 76 risks related to its business model, many of which are not common.
Nakamoto Inc, led by David Bailey, merged with a healthcare company to raise $700 million to acquire Bitcoin.
Today, macro analyst Noelle Acheson stated that it makes sense for companies to include Bitcoin in their asset reserves.
However, a large number of companies are using Bitcoin as the sole reason for their existence, which indeed raises certain warnings about excessive speculation.
The biggest risk faced by all these enterprises is macroeconomic risk. And during the Trump era, this was a huge factor.
Even Michael Saylor cannot escape the influence of geopolitics.
Tariffs, rising inflation, and the uncertain interest rate policy of the Federal Reserve have left the market on edge. Treasury yields remain high, which is particularly concerning as it suggests that investors may be losing confidence in the dollar as a safe-haven asset.
This is unfavorable for risk-oriented assets such as stocks and cryptocurrencies.
All of this means that Saylor's multi-billion dollar Bitcoin purchases, which used to boost this top cryptocurrency in the past, can no longer have such an effect.
If the stock prices of companies like Strategy or Metaplanet continue to rise, other followers may keep emerging. This could further weaken the influence of such Bitcoin purchasing behavior.
Acheson wrote: "We should restrain our enthusiasm for this kind of gimmick."
"Innovative financial engineering initially always appears as a fascinating new tool that can bring returns, but as interest and risk saturate, it inevitably becomes fragile."
Related reading: Opinion: Raising funds to purchase Bitcoin by listed companies is "toxic" leverage.
The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
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· 05-31 07:02
Forwarding the push of Blockchain continuously towards the real world, focusing on solving practical problems in the real world, is an inevitable direction for the research and application of Blockchain technology. RWA refers to the rights and interests of various tangible or intangible real assets with Intrinsic Value in the real world being fractionalized and tokenized. It is worth actively exploring, but there are also significant challenges that must be proactively and steadily advanced. #成长值抽奖，赢 iPhone 16 和精美周边##BTC行情分析##近期新币推荐#
Listed companies following MicroStrategy have raised doubts, and financing to buy Bitcoin may become a high-risk move.
Author: Pedro Solimano, DL News
Compiled by: Felix, PANews
It all started with MicroStrategy. Nowadays, it seems that a new publicly traded company announces the accumulation of Bitcoin or other cryptocurrencies every week.
But there is a problem here: investors are willing to give these companies a high valuation premium simply because they are buying Bitcoin.
What will happen if their stock does not rise as a result?
Taking Japan's Metaplanet company as an example, it replicated Michael Saylor's Bitcoin frenzy at MicroStrategy.
10xResearch stated that its stock price is calculated based on the trading price of Bitcoin at $596,154.
This is five times the current price of Bitcoin at about $106,000.
Before the company fully invested in Bitcoin, Metaplanet was an economy hotel operator that later transformed into a blockchain infrastructure provider.
With the company's rebranding and transformation into a Bitcoin reserve company, these operations have been put on hold.
10xResearch wrote in a report on May 27th: "Is it time to short? The signals we are seeing now are very similar to past turning points."
One of many companies
In fact, Metaplanet is one of the many companies following in the footsteps of Saylro, which has now been renamed to Strategy.
On May 27, Trump Media & Technology Group (TMT) announced plans to raise $2.5 billion to purchase Bitcoin.
This week, the video game retailer GameStop, which has gained fame for becoming a "meme stock," purchased 4,710 bitcoins, valued at approximately $513 million (based on current prices).
The stock prices of both companies have fallen.
These new Bitcoin reserve companies have adopted a relatively simple strategy: raising funds by issuing convertible bonds and then using the money to purchase Bitcoin in large quantities.
Why have so many people suddenly emerged to emulate Saylor? In short, it has proven effective for companies.
Since the implementation of the Bitcoin purchase plan in August 2020, the stock price of Strategy has increased tenfold. The company holds over 576,000 bitcoins, worth approximately $63 billion.
Act with caution
But skeptics argue that there are good reasons to remain cautious.
First of all, the idea that hoarding Bitcoin or any other cryptocurrency on a company's balance sheet is a surefire way to profit is simply nonsense.
Renowned macro analyst Noelle Acheson stated that those who follow Saylor firmly believe that this strategy is risk-free, which is concerning. "Especially those who enter the market when Bitcoin prices are high."
When Strategy first purchased Bitcoin, the trading price was about $11,000, which is only about one-tenth of the current $107,000.
As this strategy becomes increasingly popular, analysts and seasoned investors may focus attention on a specific metric to filter out the noise—namely, the Net Asset Value (NAV).
NAV refers to the book value of the assets held by the company.
When there is a mismatch in NAV, it means that the company's stock price does not align with the actual value of its held assets.
Take Metaplanet as an example.
The company holds approximately $830 million worth of 7,800 bitcoins. However, the company's market value is $5.6 billion, which means one bitcoin is worth $596,154.
In other words, the price that investors pay for indirect investment in Bitcoin is five times the price of Bitcoin itself.
10xResearch analysts stated, "A dangerous NAV distortion is quietly forming."
"We should restrain our enthusiasm for such gimmicks." — Noelle Acheson
This means that Metaplanet's stock price (which has risen 233% this month) could reverse its trend at any time.
But don't forget about the Strategy. Its frequent premium may be beneficial to shareholders, but it is also concerning.
According to Strategy Tracker data, in 2020, investors valued Strategy stocks at more than six times their Bitcoin value, which exceeded three times their value last year.
Hedge fund experts like legendary short seller Jim Chanos have been shorting Strategy by taking advantage of the NAV mismatch phenomenon and buying more Bitcoin.
insider selling
At the same time, cryptocurrency reserve strategies are gaining significant momentum.
Just this week, Trump Media & Technology Group (TMT), the parent company of Trump's social media company, plans to raise $2.5 billion to invest in Bitcoin. However, after disclosing the plan, its stock price plummeted by 11%.
Why? Some people may worry that insiders will sell their shares.
The company stated that potential future stock sales may include shares from some insiders, such as the trust controlled by its son, Donald Trump Jr., which holds 57% of the company's shares.
At the same time, many companies that emulate Saylor (some of which are not even cryptocurrency companies) have their valuations entirely dependent on the amount of Bitcoin they hold.
Semler Scientific manufactures medical devices. After purchasing 581 bitcoins, its stock price soared by 30%.
Strive Asset Management, founded by former presidential candidate Vivek Ramaswamy, announced that it has raised $750 million for the purchase of Bitcoin, with another $750 million in preparation.
The technology company ASST announced its merger with Strive Asset Management, transforming into a Bitcoin reserve company, and its stock price subsequently rose by 194%.
A new startup called Twenty One, led by Bitcoin evangelist Jack Mallers and supported by Tether, SoftBank, and Cantor Fitzgerald, has the sole purpose of absorbing as much Bitcoin as possible.
The holding company named Cantor Equity Partners has seen its stock price rise by over 300% since its establishment at the end of April.
The company listed 76 risks related to its business model, many of which are not common.
Nakamoto Inc, led by David Bailey, merged with a healthcare company to raise $700 million to acquire Bitcoin.
Today, macro analyst Noelle Acheson stated that it makes sense for companies to include Bitcoin in their asset reserves.
However, a large number of companies are using Bitcoin as the sole reason for their existence, which indeed raises certain warnings about excessive speculation.
The biggest risk faced by all these enterprises is macroeconomic risk. And during the Trump era, this was a huge factor.
Even Michael Saylor cannot escape the influence of geopolitics.
Tariffs, rising inflation, and the uncertain interest rate policy of the Federal Reserve have left the market on edge. Treasury yields remain high, which is particularly concerning as it suggests that investors may be losing confidence in the dollar as a safe-haven asset.
This is unfavorable for risk-oriented assets such as stocks and cryptocurrencies.
All of this means that Saylor's multi-billion dollar Bitcoin purchases, which used to boost this top cryptocurrency in the past, can no longer have such an effect.
If the stock prices of companies like Strategy or Metaplanet continue to rise, other followers may keep emerging. This could further weaken the influence of such Bitcoin purchasing behavior.
Acheson wrote: "We should restrain our enthusiasm for this kind of gimmick."
"Innovative financial engineering initially always appears as a fascinating new tool that can bring returns, but as interest and risk saturate, it inevitably becomes fragile."
Related reading: Opinion: Raising funds to purchase Bitcoin by listed companies is "toxic" leverage.