The Bitcoin craze fades, Metaplanet and Strategy suffer

Once known as the 'Japanese MicroStrategy', the listed company Metaplanet became popular by aggressively buying Bitcoin, even briefly entering the FTSE Japan Index. Transitioning from the traditional hospitality industry to a digital asset reserve company, its stock price surged from 350 yen to 1930 yen in the first half of 2024, becoming a barometer for Japanese crypto stocks.

However, the good times did not last long. Since the peak in mid-June, the stock price has plummeted over 56%, leaving it at only 831 yen. Its collaboration with the US Evo Fund on the 'Bitcoin flywheel' financing model has also stagnated due to the drop in stock price. In simple terms, this flywheel involves Evo buying Metaplanet stocks at a discount, with Metaplanet using the funds to purchase Bitcoin, driving both stock prices and assets upwards. Now that the stock price has dropped, Evo has little incentive to buy stocks, and Metaplanet’s funds for buying Bitcoin have also significantly shrunk. The latest market capitalization is only twice the value of its Bitcoin holdings, far below the previous peak of eight times.

To cope with the difficulties, Metaplanet announced in September that it would suspend Evo's stock subscription rights and consider issuing up to 555 million preferred shares to actively attract overseas investment for replenishment.

US stock giant Strategy is also uneasy

In the US market, the financial strategy giant Strategy is facing similar pressure. Since August of this year, its stock price has dropped by 15%, and the issuance of preferred shares has not been ideal. Recently, Strategy suddenly issued 875,301 shares of common stock, breaking its previous commitment not to issue more shares unless the market capitalization premium was over 2.5 times, which the market viewed as diluting the rights of existing shareholders and further undermining investor confidence.

As market attention shifts to more efficient and promising digital assets like Ethereum (ETH) and Solana (SOL), whether an asset strategy purely centered on Bitcoin can continue to attract funds has become a big question mark. What do you think, dear readers? Feel free to leave a comment.

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