Key Notes

• The flywheel model, which relied on rising Metaplanet stock price to generate capital for Bitcoin purchases, has lost momentum.
• This has reduced the premium over its Bitcoin holdings from eight times to roughly twice, raising concerns over potential shareholder dilution.
• Metaplanet plans to raise $884 million through overseas share offerings and seek shareholder approval.

Metaplanet stock has come under strong selling pressure on Sept. 1, despite the firm also announcing a 1,009 BTC

BTC
$109 301



24h volatility:
0.8%


Market cap:
$2.18 T



Vol. 24h:
$35.19 B

purchase earlier today, thereby taking its total holdings to 20,000 BTC. As a result, the company is now 66% on its target of having 30,000 BTC treasury by year-end.

Why Is Metaplanet Stock Down Despite Bitcoin Purchases?

Over the past month, the Metaplanet stock has been moving sideways and is once again testing the support of 830 JPY, after a 5.4% correction. The latest pressure on the stock price comes as the company’s fundraising mechanism comes under strain.

Unlike other declining stocks with border market weakness, the drop in Metaplanet comes due to an internal funding mechanism, according to the report by Bloomberg. The report explains that the Japanese firm employs a “flywheel model” rising share prices triggered warrants with its financing partner Evo Fund, generating fresh capital that was then used to buy more Bitcoin.

This model fueled investor optimism as long as the stock price remained elevated. However, as Metaplanet shares began sliding, the mechanism lost momentum. Since June, Metaplanet’s stock has fallen nearly 54%, causing the premium over its Bitcoin holdings to collapse.

Metaplanet aims to raise $884 million through overseas share offerings and will seek shareholder approval at its meeting on September 1 to issue up to 555 million preferred shares, potentially generating $3.8 billion to expand its Bitcoin holdings. Eric Trump, who’s leading the Trump family DeFi project World Liberty Financial, has been allocated 3.3 million shares.

In June, the firm’s market capitalization was more than eight times the value of its Bitcoin portfolio. Now, it stands at roughly twice that value. The shrinking premium has also amplified concerns over potential shareholder dilution.

Metaplanet Takes BTC Holdings Above 20,000

Despite the Metaplanet stock being under pressure, the firm has continued its Bitcoin purchases further. The company’s total Bitcoin portfolio now stands at 20,000 coins, acquired at a cumulative cost of approximately $2 billion.

Following today’s purchase, the Japanese firm overtakes the Bitcoin miner Riot platform in BTC holdings. On the other hand, Bitcoin price has also been under pressure, moving sideways under $108,000, down over 15% from its all-time high levels.

Short-term Bitcoin price action appears bearish, with the MACD and CRSI indicating oversold conditions and continued downside pressure as recent lows are tested and sellers dominate the market. Analysts see a strong capital rotation from BTC to ETH.

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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