Metaplanet, often referred to as Japan’s MicroStrategy for its adoption of Michael Saylor’s Bitcoin investment strategy, is approaching a critical juncture as Bitcoin (BTC) returns below 30% of its all-time high in less than a month.
Metaplanet Bitcoin Holdings Plummet
From November 26, Metaplanet ranks as the fourth largest public Bitcoin treasury company, with just over 30,000 BTC worth approximately $2.7 billion, with an average acquisition cost of approximately $108,000 per coin. Currently, Bitcoin is trading at around $87,700, leaving the company with a loss of almost 17% on its investments.
The company is about $640 million underwater, exacerbated by a sharp decline in its share price, which has fallen 81% from a high of ¥1,935 in June to its current valuation of ¥366 per share on the Tokyo Stock Exchange.
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Recently, Metaplanet borrowed another $130 million to strengthen its business Bitcoin ownershipa decision announced on November 21 under a previously agreed $500 million credit facility announced in late October.
This loan is structured with a variable interest rate that renews daily, allowing repayment at any time. Importantly, the loan is fully backed by the company’s Bitcoin reserves.
However, market expert Shanaka Anslem has expressed concern on social media platform X (formerly Twitter) about the implications of these maneuvers for Metaplanet’s near-term stability.
Important data approach
Anslem marked two crucial dates that the market should keep a close eye on: December 18, when the Bank of Japan (BoJ) will make a decision 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 claims that if the Bank of Japan opts for tighter monetary policy, resulting in a stronger yen, Bitcoin prices could fall, potentially collapsing Metaplanet’s equity premium and jeopardizing fundraising.
Conversely, if the central bank maintains its dovish policy, leading to a weakened yen but stable Bitcoin prices, the vote could pass, allowing the company to survive.
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This situation has a meaning that extends beyond Metaplanet itself. Japan currently has no Bitcoin exchange traded fund (ETF), making Metaplanet the only option for Japanese investors to gain exposure to Bitcoin through the stock exchange.
This factor contributed to a 4,000% increase in the company’s stock value by 2024; However, the price fell 81% as Bitcoin plunged 30% last month amid mounting selling pressure that has sparked fears of a new bear market among investors.
Leverage further increases existing risks. For Metaplanet to break even, Bitcoin needs to reach $108,000. However, for their investment model to function effectively, BTC must exceed $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 neither as a triumph nor as a failure, but as the most consequential experiment in corporate Bitcoin allocation currently underway… The hotel company that bet everything on Bitcoin is approaching its moment of truth. The world should be watching.
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