Is Metaplanet's Bitcoin Strategy Failing?

Metaplanet, often referred to as Japan's “MicroStrategy,” is facing a serious reality check.

Once trading at a high, the company’s enterprise value has recently fallen below the value of its cryptocurrency reserves, leading investors to question whether the cryptocurrency craze is losing steam. 

Metaplanet's mNAV drops below 1
 Metaplanet's enterprise value fell below its Bitcoin holdings on Tuesday,  Bloomberg reported. According to the company's website  , mNAV, a measure that compares enterprise value to the net value of its Bitcoin holdings, fell to 0.99. This is the first time the metric has fallen below 1.

The mNAV ratio   shows how much the market values ​​a Bitcoin fund company relative to the amount of Bitcoin it holds. An mNAV of 1.0 means the market values ​​the company roughly equal to its BTC holdings, while a value above 1.0 indicates a premium, reflecting additional value such as brand or strategy. An mNAV below 1.0 signals a discount, possibly due to debt or other risks.

While it is not a substitute for audited financial statements, it does show the value of a company coming from its BTC treasury relative to other factors.

Metaplanet shares fall 70%
Metaplanet began buying Bitcoin in April 2024 and quickly became popular with investors, trading at a premium to the value of its cryptocurrency holdings. The company's stock soared to an all-time high in mid-June. However, it has since fallen about 70%.

The stock is currently trading at 482 yen, down more than 12% over the past day. This comes after Metaplanet  temporarily suspended  the exercise of some stock options. The company currently holds more than 30,000 Bitcoins, worth $3.4 billion.

Is the cryptocurrency craze dying down?
Some analysts see this as a “bubble burst.” While this may indicate that the hype around companies hoarding Bitcoin has cooled, long-term enthusiasts may see this dip as a potential buying opportunity. 

Digital asset fund managers have become more popular this year by offering investors exposure to cryptocurrencies through familiar publicly traded stocks. Most of these companies traded at a premium over the summer to the value of the crypto assets they hold.

But the tide is now turning. Several other token holders are also seeing their share prices come under pressure as the pace of cryptocurrency accumulation slows.

Experts also warn  that this could mirror the dot-com bubble of the 2000s, when hype and risky bets led to a near 80% market crash.