Metaplanet stock price crashed below the important support level at ¥1,000 on Monday morning, even as Bitcoin rebounded. It crashed to a low of ¥978, its lowest level since May 23rd, and 50% below its highest point this year.
Why Metaplanet share price is crashing
Metaplanet, a top Bitcoin Treasury company, has deviated from the price of Bitcoin. It has moved deep into a bear market after falling by 50% from its all-time high of ¥1,929.
Metaplanet’s crash happened even as Bitcoin continued hovering near its all-time high. In theory, the two assets should move in the same direction as Metaplanet holds 17,132 coins valued at $1.96 billion.
The stock has likely dropped for three main reasons. First, its plunge aligned with that of other Bitcoin treasury companies. For example, Strategy stock has dropped by 20% from its highest point this year.
Other top companies, such as Mara Holdings, Trump Media, Semler Scientific, and GameStop, have all plunged in the past few months. This is a sign that demand for these companies has waned in this period.
Metaplanet share price has also crashed because of the rising concerns about its dilution. Dilution is a situation where a company issues new shares, increasing the number of those outstanding and reducing the ownership percentage of existing investors.
Metaplanet buys Bitcoin by issuing new shares, mostly through share issuances and convertible bonds. On Friday, the management said that it would raise another $3.7 billion to fund Bitcoin purchases.
It will do that by increasing share authorization from 1.61 billion to 2.72 billion. This new share issuance will be voted in an extraordinary general meeting on September 1.
Valuation concerns remain
Metaplanet share price has also plunged because of its valuation. Like Strategy (MSTR), Metaplanet is not valued because of its core hotel business. Instead. Its valuation is based on its Bitcoin holdings.
While the valuation gap has reduced a bit, the NAV is still wider than other companies. In this, the company has a NAV multiple of 2.42, higher than most companies that have a multiple of less than 2.
The NAV multiple is calculated by dividing the company’s Bitcoin balances by its market capitalization. It means that its market cap is 2.4x higher than the company’s valuation.
Metaplanet stock price has also plunged because of profit-taking after it surged by over 15,000% from its lowest level last year. It is common for companies and other assets to pull back after going parabolic in a certain period.
Read more: Japan’s Metaplanet tops $2 billion in Bitcoin holdings as debt-fuelled strategy intensifies
Metaplanet stock price technical analysis
Metaplanet share price chart | Source: TradingView
The daily chart shows that the Metaplanet share price has been in a strong bearish trend in the past few months. It plunged from a high of ¥1,929 in June to slightly below the support at ¥1,000.
The stock moved below the 50-day and 100-day Exponential Moving Averages (EMA), while oscillators have pointed downwards. Additionally, the MACD and the Relative Strength Index (RSI) have declined over the past few weeks.
The stock will likely continue falling as sellers target the support at ¥724, its highest point in February this year. A move above the 50-day moving average will invalidate the bearish view.
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