The Bitcoin investment firm has recently faced significant challenges, as it did not make any purchases of Bitcoin last week, marking a noticeable change in its usual operational pattern. TD Cowen analyst Lance Vitanza reported that the firm’s stock price has plummeted 38% this year, landing near a 14-month low. This lack of activity in Bitcoin acquisition is unusual for the company, which typically starts each week by reporting on its latest Bitcoin stockpile additions.
Vitanza noted in an email that no securities were issued under the firm’s at-the-money offering programs, an indication that the company has halted its purchasing activity. Following a slight increase in its share price, which rose by 5% to $179 on Friday, the overall trajectory remains troubling. The firm’s shares are down 67% from the peak price of $543 seen last year, reflecting the wider downturn in Bitcoin prices. Last week, Bitcoin fell as low as $82,175, while it was trading around $89,000 Monday afternoon, a significant decrease from the high of $126,000 reached the previous month.
In a recent prediction market conducted by Myriad, a subsidiary of Dastan, approximately 69% of participants believed Bitcoin could rise to $100,000, while a lesser percentage anticipated a drop to $69,000. This sentiment showcases the volatility and uncertainty surrounding Bitcoin’s future.
Notably, the firm did not announce any Bitcoin purchases in early October, a timing that correlates with the pauses seen at the end of previous fiscal quarters. Vitanza also warned of potential ramifications regarding the firm’s status within MSCI indices, indicating their possible removal could lead to outflows of as much as $11.6 billion if significant investors decide to exit. MSCI has highlighted similarities between the firm and investment funds, which are ineligible for inclusion. Vitanza refuted this characterization, asserting that the firm operates as a public company with a $500 million software business, utilizing Bitcoin as productive capital rather than merely as an investment.
Should removal from MSCI indices occur, it could prompt considerable selling pressure on the firm’s shares, further complicating an already precarious situation. Earlier this month, the firm’s market cap dipped below the value of its Bitcoin holdings, hindering its ability to increase Bitcoin ownership through common stock issuance. Historically, the firm has raised funds through preferred share offerings to continue its Bitcoin-buying strategy.
As of now, the firm owns nearly 650,000 Bitcoins valued at approximately $57.8 billion, yet the current market dynamics pose significant challenges to its operational strategy and future growth potentials.
