The Metaplanet share price has been in a strong downward trajectory this year, and is now hovering at the lowest point since May this year. It has plunged by over 70% from its highest point this year, erasing billions of dollars in value. This article explores why it is in freefall.
Metaplanet share price has crashed as Bitcoin treasury companies dive
The Metaplanet stock price has been in a strong downward trajectory as investors sour on Bitcoin treasury companies, with some investors describing this as the bursting of the treasury bubble.
Michael Saylor’s Strategy stock price has plunged by 35% from its highest level this year and by 45% from its highest point in 2024.
MicroCloud Hologram stock price has plunged by over 98% from its highest level in December when it unveiled its Bitcoin treasury strategy. Other companies that have plunged this year are the likes of Bullish, Trump Media, and Semler Scientific.
One possible reason for this industry-wide crash is that the industry has become highly saturated, with the number of treasury companies rising. In most cases, the companies adding Bitcoin to their holdings are firms that have gone through a rough patch.
Falling mNAV ratio
The other main reason why the Metaplanet share price has plunged this year is that its premium has continued to narrow such that the enterprise value dropped below its Bitcoin holding for the first time on Tuesday.
The mNAV has been in a strong downward trend after peaking at over 22 earlier this year. A falling premium is an important thing to Bitcoin treasury companies that depend on raising money to accumulate.
Ideally, the cost of capital when a company has a high premium is low compared to when the mNAV is falling. For example, MicroStrategy had a policy to never sell shares when the mMNAV was below 2.5 as that meant more dilution. It recently changed this policy as the NAV fell.
Continued dilution of investors
Further, the Metaplanet share price has collapsed because of the ongoing dilution of shareholders as the company continues to raise cash to buy Bitcoin.
Metaplanet’s shareholders recently gave it an approval to raise cash through share sales and preferred shares. Raising cash through share sales leads to dilution. In Metaplanet’s case, the number of outstanding shares jumped to 654 million today from 114 million last year.
Raising cash through selling preferred shares involves selling a certain class of shares, with the holders receiving a dividend. The challenge is that raising this capital is not easy especially when the mNAV has plunged. This likely explains why Metaplanet has not bought any Bitcoins recently.
Metaplanet stock price has formed a death cross pattern
The daily timeframe chart shows that the Metaplanet stock price has been in a strong freefall after peaking at ¥1,932 in June this year. It has continued to make a series of lower lows and lower highs in this period
The stock has plunged below the important support level at ¥709, the highest swing in February this year. This week, it moved below the important support level at ¥500, which is both a psychological level and the lower side of a small double-bottom pattern whose neckline is at ¥665.
The stock has now formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) have crossed each other. A death cross is one of the most popular bearish continuation signs in technical analysis.
The Relative Strength Index (RSI) has continued falling and is nearing its oversold level. Therefore, the most likely scenario is where the stock continues plunging, with the next target level being at ¥297, the lowest level in April this year.
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