10X Research: Bitcoin FUD Company Stock Price Crash has Resulted in Retail Investors Losing Approximately $17 Billion

BlockBeats News, October 18th, according to Bloomberg, a recent research report shows that retail investors have estimatedly lost $17 billion in the process of indirectly investing in Bitcoin through digital asset holding companies such as Metaplanet and Michael Saylor's Strategy. These losses are mainly due to the excessive equity premium, allowing these companies to issue stocks at prices far exceeding the actual value of their crypto asset holdings.

Now, the stock prices of these companies have completely collapsed, leading to a large number of retail investors being deeply trapped. "The financial magic era of Bitcoin holding companies is coming to an end," wrote a 10X Research analyst in a report released on Friday from Singapore.

This report, titled "After the Magic: How Bitcoin Holding Companies Must Move Beyond the Net Asset Value Illusion," points out that retail investors "have actually lost about $17 billion, with new shareholders paying an additional $20 billion premium to gain Bitcoin exposure." Using Strategy as an example, the author notes that the company's stock price is currently only 1.4 times the value of its Bitcoin holdings, a significant drop from the 3-4 times premium levels seen in the past.

Most Bitcoin holding companies' strategy is quite simple: issue stocks at a premium above net asset value, use the price difference to buy Bitcoin, and repeat this process. Researchers pointed out that Metaplanet, through a $1 billion investment in Bitcoin, saw its market cap soar to $8 billion at one point, then drop to $3.1 billion, while its Bitcoin holdings were valued at $3.3 billion.

"In this process, shareholders lost $4.9 billion in market cap, while the company successfully accumulated $2.3 billion worth of Bitcoin — a commendable 'feat'," the report stated.

The report emphasizes the need to be cautious of the compression between market cap and stock price. These companies now need to find a new way to survive. Researchers believe that Bitcoin holding companies must move away from relying on the "inflated" net asset value to purchase Bitcoin, and shift towards operating more like arbitrage-driven asset management firms. While this may reduce Bitcoin's upside potential, the ability to adapt to this new model will determine the profitability prospects of these companies.