Metaplanet, often dubbed Japan’s MicroStrategy for its adoption of Michael Saylor’s Bitcoin investment strategy, is approaching a critical juncture as Bitcoin (BTC) retreats below 30% of its all-time highs in less than a month.
Metaplanet Bitcoin Holdings Plunge
Starting November 26, Metaplanet ranges as the fourth largest public Bitcoin treasury company, with just over 30,000 BTC valued at approximately $2.7 billion, with an average acquisition cost of around $108,000 per coin. Currently, Bitcoin is trading at approximately $87,700, putting the company at a nearly 17% loss on its investments.
The company is about $640 million underwater, compounded by a sharp drop in its share price, which has plunged 81% from June highs of 1,935 yen to its current valuation of 366 yen per share on the Tokyo Stock Exchange.
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Metaplanet recently borrowed an additional $130 million to bolster its bitcoin holdingsdecision revealed in a Nov. 21 filing under a $500 million credit facility previously established and announced in late October.
This loan is structured with a floating interest rate that renews daily, allowing for payment at any time. Importantly, the loan is fully collateralized by the company’s Bitcoin reserves.
However, market expert Shanaka Anslem has expressed concern on social media platform
Key dates focus
Anslem highlighted two key dates that the market should follow closely: December 18, when the Bank of Japan (BoJ) will decide on interest rates, and December 22, when Metaplanet shareholders will vote on a proposed $135 million fundraising initiative.
The results of these events are intertwined. The expert claims that if the Bank of Japan opts for tighter monetary policy, which would result in a strengthening yen, Bitcoin prices could drop, potentially collapsing Metaplanet’s stock premium and jeopardizing the fundraising vote.
Conversely, if the central bank maintains its lax policies, leading to a weakened yen but stable Bitcoin prices, the vote could pass, allowing the company to survive.
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This situation has importance beyond the Metaplanet itself. Japan currently lacks Bitcoin exchange-traded fund (ETF), making Metaplanet the only avenue for Japanese investors to gain exposure to Bitcoin through the stock market.
This factor contributed to a 4,000% increase in the company’s share value in 2024; However, the price plunged 81% as Bitcoin fell 30% over the past month amid growing selling pressure that has sparked fears of a new bear market among investors.
Leverage further amplifies existing risks. For Metaplanet to break even, Bitcoin must reach $108,000. However, for their investment model to work effectively, BTC must exceed $130,000. If Bitcoin falls below $70,000, Metaplanet may have to sell assets to meet collateral requirements. Anslem more noted:
For now, Metaplanet represents neither a triumph nor a failure, but rather the most important experiment in corporate Bitcoin allocation currently underway… The hotel company that bet everything on Bitcoin is approaching its moment of truth. The world should be watching.
Featured image of DALL-E, chart from TradingView.com
