Why American Bitcoin stock price is sinking as BTC rises

Trump-linked American Bitcoin stock price tanked by over 40% on Tuesday, reaching its lowest level since May this year. 

Why is American Bitcoin stock crashing

The ABTC stock plunged to $2, down 86% from its year-high. This plunge has brought its market capitalization to $1.9 billion, down from $8.6 billion a few months. 

The stock crashed happened on the same day that Bitcoin (BTC) and other altcoins rebounded. Bitcoin price jumped by over 4.5% and crossed the critical resistance at $90,000.

ABTC also plunged as other companies in the Bitcoin treasury industries rebounded. MSTR stock soared by over 4%, while Trump Media rose by 1%. Bullish and GD Culture stock also rebounded. 

In most cases, Bitcoin treasury companies do well when BTC is in an uptrend, as this normally boosts the value of their assets. 

American Bitcoin, spun off from Hut 8 Mining and co-founded by Eric Trump, is a top BTC holder with 4,002 coins on its balance sheet. Its coins are now valued at over $363 million, well below its current market cap. 

There was no single catalyst for the ABTC crash today. That is a sign that the crash could be due to selling pressure and panic selling by retail traders, who have suffered substantial losses since the company went public.

Additionally, the stock may have dropped due to its higher valuation multiple compared to its rivals. For example, while Metaplanet and Strategy have a negative mNAV ratio, ABTC has a multiple of 5. 

The higher multiple is likely due to its business model, which differs from those of other treasury companies. It mostly accumulates Bitcoin through its mining operations rather than buying from third parties. 

The most recent results showed that the company’s revenue rose to $64 million in the third quarter, while the net income was $3.4 million.

ABTC stock price technical analysis

The daily chart shows that the ABTC stock price has slumped in the past few months. This drop followed a double-top pattern at $14.50 and a neckline at $3.70, its lowest level in June this year. A double top often signals more downside. 

The stock has remained below the 50-day moving average, while the Average Directional Index has risen to 23, its highest point since October. It also formed a death cross, as the 50- and 200-day moving averages crossed.

Therefore, the double-top pattern points to more downside, potentially to the psychological point at $1.50.