Quick overview

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The Metaplanet, referred to as “Asia’s MicroStrategy,” actively constructed a Bitcoin treasury as a hedge against the economic challenges facing Japan, such as a depreciating yen and a large public debt.

The Tokyo-listed company has accumulated 30,823 BTC, ranking fourth among public Bitcoin holders worldwide, behind XXI, MARA Holdings, and MicroStrategy. Its valuation has recently fallen below the value of those holdings due to market pressures, though, indicating that investor confidence in its strategy is waning.

Though risks like operational losses and dilution from recent $1.4 billion equity raises loom large, investors can effectively purchase Metaplanet’s BTC exposure at a ~1 percent haircut after accounting for debt, thanks to this discount (mNAV <1).

Change in Market Sentiment: Metaplanet’s stock surged after launch, but it has since plummeted in the face of wider cryptocurrency volatility. Analysts have referred to the 4 percent decline in BTC to about $110,000 on October 14 as a “popping bubble” in Bitcoin-treasury stocks.

Metaplanet’s market-adjusted net asset value (mNAV) has fallen below 1.0, indicating that the market is currently undervaluing its Bitcoin assets.

The mNAV is defined as the sum of market capitalization and total liabilities divided by the net asset value of the company’s Bitcoin holdings. A value below 1.0 suggests that the equity market values the company lower than its underlying Bitcoin assets.

Metaplanet’s mNAV dropped to 0.99, marking the first instance it has fallen below the 1.0 threshold. This decline coincided with broader market pressures, such as increasing tensions between the U.S. and China, causing the company’s shares to drop by 12 points, or 36%, to close at JPY 482.

Market analysts are still debating the implications of this mNAV dip. Mark Chadwick from Smartkarma suggested that the drop could serve as a “bubble-bursting” warning for treasury stocks tied to digital assets, as reported by Bloomberg. However, some analysts note that comparable companies have traded below an mNAV of 1.0 without experiencing structural distress.

Optimistic investors see the market’s undervaluation of Metaplanet’s hybrid exposure to Bitcoin and its operational growth as a potential buying opportunity, despite the recent decline of JPY 68.