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Crypto-Exposed Stocks Suffer Significant Drawbacks as Bitcoin-Exposed Treasuries Lose Value



The recent violent crypto market meltdown has not only affected the specific market but has flowed into the stocks market. Specifically, the publicly listed firms with exposure to crypto assets have experienced significant losses this month.

The month of May has seen Bitcoin and other leading cryptocurrencies crash by at least 50%. Bitcoin has fallen from around $60,000 on May 10 and is currently trading below $40,000.

Investors still recording gains after market slump

MicroStrategy (MSTR) is the largest publicly traded firm by number of BTC held in its reserve. The company made the high purchases of BTC in 2020, which had a huge impact on value and demand of the asset. MSTR saw its share price drop from $657 at the end of April to around $450 as of May 21, a 31.5% decrease in just three weeks. However, after Bitcoin’s 50% bounce from the weekend lows, MSTR seemed to have benefited by gaining almost5% in the last 24 hours to trade at $472.45.

However, despite the market crash, Bitcointreasuries.org reports that MicroStrategy’s 92,000 Bitcoin have appreciated in value by around $1 billion.

Another publicly traded company that took a hit this month is Tesla. The shares slumped 18% from $709 at the end of April to $581 on May 21. However, the shares of TSLA have rallied 4.4% in the last day to trade at $606.44.

Tesla CEO Elon Musk made an announcement on May 13 stating that the company was henceforth suspending Bitcoin as an accepted method of payment for its vehicle fleet. The firm is however yet to announce its stand on the 43,200 BTC from its reserves. Estimates from Bitcointreasuries show that Tesla’s BTC holdings has gained a 10% value since the company invested in Bitcoin worth $1.5 billion.

Massive drops in value for investors who got in during the bull market

The recent market drop has however not favoured all investors. For instance, the Chinese smartphone manufacturer and app developer, Meitu, is among those who have registered major losses and decline in value of their investment. Meitu invested $49.5 million in BTC near the asset’s all-time highs in March and April. The firm’s BTC holdings are now worth $35.9 million. Additionally, it has also suffered as its share price has dropped 19% from around $0.31 to $0.26 since the end of April.

Nexon, a Japanese gaming firm announced it had made an untimely purchase of BTC worth $100 million on April 28, making the firm’s BTC holdings valued at only $67 million. Nexon’s share price has at the moment slumped 29.5% from $33.35 at the end of April to $23.49 today.

Inflation concerns affecting crypto sector

Some analysts believe that the sell-off currently happening in the tech and crypto sectors may be aggravated by concerns of inflation in the U.S.

David Mazza, the managing director of leverage ETF issuer, Direxion, spoke to Reuters and offered his speculations that higher risk assets, whether in the form of cryptocurrencies or the most speculative growth stocks, are seeing their multiples taken down markedly as investors begin to reassess what impact the potential for inflation will have.

Image courtesy of pixabay



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