Bitcoin Treasury Companies Face Higher Volatility Than Bitcoin Itself

TLDR

• Bitcoin’s volatility has led to significant declines in Bitcoin Treasury Companies’ stocks, with losses ranging from 50% to 80%.
• Metaplanet experienced 12 mini-bear markets in 18 months, with some declines lasting up to four months.
• Internal corporate factors like capital raising and Bitcoin premium fluctuations are key drivers of BTCTC stock volatility.
• More than half of Metaplanet’s stock declines were caused by factors unrelated to Bitcoin’s price movements.
• While Bitcoin remains the dominant influence, corporate actions amplify the volatility of BTCTC stocks significantly.

Bitcoin’s recent volatility has caused sharp declines in Bitcoin Treasury Companies (BTCTCs) stocks, with losses ranging between 50-80%. Investors are concerned about the increasing gap between Bitcoin’s performance and the performance of these companies. A prime example is Metaplanet (MTPLF), which has experienced severe fluctuations, including 12 mini-bear markets within just 18 months.

Bitcoin’s Influence on BTCTC Stocks

Over the past few weeks, Bitcoin’s price swings have greatly impacted BTCTC stocks. However, Metaplanet’s recent downturns highlight that Bitcoin’s volatility alone may not be the full explanation. “Only 41.7% of Metaplanet’s corrections coincided with Bitcoin’s down cycles,” analyst Mark Moss explained. This suggests that internal corporate factors are also significantly affecting BTCTC stock performance.

Metaplanet’s performance provides key insight into the volatility of BTCTC stocks. The company saw 12 major declines within a short period, with many lasting 20 days or more. These downturns averaged a -32.4% drop, but the most severe decline reached 78.6%, spanning more than four months. While Bitcoin experienced its own fluctuations, Metaplanet’s troubles went beyond Bitcoin’s price movements.

Internal Factors Amplifying BTCTC Volatility

Metaplanet’s internal corporate factors appear to play a major role in its stock volatility. According to Moss, these factors include capital raising efforts, option issuance, and fluctuations in the “Bitcoin premium” the gap between the Bitcoin price and the value of BTC holdings. “More than half of Metaplanet’s downturns were due to internal corporate factors,” Moss said.

These internal dynamics seem to have a stronger impact during periods of heightened Bitcoin volatility. When Bitcoin enters a phase of high volatility, BTCTC stocks like Metaplanet’s are often hit harder and stay weak for longer. Investors must therefore consider corporate strategies and financial management when investing in BTCTCs, as these factors can drive greater volatility than Bitcoin itself.

Despite these internal factors, Bitcoin remains the dominant force influencing BTCTC stock prices. However, corporate actions can serve as “leverage,” amplifying the effects of Bitcoin’s volatility. BTCTCs can thus behave in a much more volatile manner compared to Bitcoin, with some companies enduring a “four cycles in a single year” approach.

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