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Metaplanet, often dubbed Japan’s MicroStrategy for its adoption of Michael Saylor’s Bitcoin investment strategy, is nearing a critical juncture as Bitcoin (BTC) retraces below 30% of its all-time highs in under a month.
Metaplanet Bitcoin Holdings Plummet
As of November 26, Metaplanet ranks as the fourth largest public Bitcoin treasury company, holding 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, placing the firm at a nearly 17% loss on its investments.
The company finds itself about $640 million underwater, compounded by a steep drop in its stock price, which has plummeted 81% from June highs of ¥1,935 to its current valuation of ¥366 per share on the Tokyo Stock Exchange.
Recently, Metaplanet borrowed an additional $130 million to bolster its Bitcoin holdings, a decision disclosed in a filing on November 21 under a previously established $500 million credit facility announced in late October.
This loan is structured with a floating interest rate that renews daily, allowing for repayment at any point. Importantly, the loan is fully secured by the company’s Bitcoin reserves.
However, market expert Shanaka Anslem has raised concerns on social media platform X (formerly Twitter) about the implications of these maneuvers for Metaplanet’s short-term stability.
Key Dates Approach
Anslem highlighted two pivotal dates that the market should closely monitor: 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 outcomes of these events are intertwined. The expert asserts that if the Bank of Japan opts for tighter monetary policy, resulting in a strengthened yen, Bitcoin prices may decline, potentially collapsing Metaplanet’s stock premium and jeopardizing the fundraising vote.
Conversely, should the central bank maintain its loose policies, leading to a weakened yen but stable Bitcoin prices, the vote may pass, allowing the company to survive.
This situation holds significance beyond Metaplanet itself. Japan currently lacks a Bitcoin exchange-traded fund (ETF), making Metaplanet the sole avenue for Japanese investors to gain exposure to Bitcoin via the stock exchange.
This factor contributed to a 4,000% increase in the company’s stock value in 2024; however, the price plunged 81% when Bitcoin dropped by 30% over the past month amid rising selling pressure that has prompted fears of a new bear market among investors.
Leverage further amplifies the existing risks. For Metaplanet to break even, Bitcoin must reach $108,000. For their investment model to function effectively, however, BTC must surpass $130,000. If Bitcoin falls below $70,000, Metaplanet may have to sell assets to meet collateral requirements. Anslem further noted:
For now, Metaplanet stands as neither triumph nor failure but as the most consequential experiment in corporate Bitcoin allocation currently running… The hotel company that bet everything on Bitcoin approaches its moment of truth. The world should be watching.
Featured image from DALL-E, chart from TradingView.com
