Investor Frenzy Inflates Share Price

Metaplanet, Asia’s largest Bitcoin treasury holder, is witnessing an extraordinary surge in its stock value. According to a May 27 report by 10x Research, investors are paying as if BTC is valued at $596,154—over five times its actual market price of around $109,499. This premium highlights how retail investors may be drastically overpaying for indirect Bitcoin exposure.

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The report warns that those ignoring a firm’s Net Asset Value (NAV) might be walking into overvalued positions with limited upside. Another prominent example is MicroStrategy, whose shares suggest an implied Bitcoin price of $174,100. These premiums, while boosting corporate valuations, may ultimately dilute value for incoming shareholders.

Corporate Bitcoin Holdings Expand

Metaplanet currently holds more than 7,800 BTC, worth over $855 million, representing 0.037% of the total supply. After a recent purchase of 1,004 BTC on May 19, the firm is targeting a total of 21,000 Bitcoin by 2026. This aggressive accumulation strategy is applauded by some for advancing adoption but raises questions as retail investors are pushed into paying steep premiums rather than buying BTC directly.

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On November 22, Bitcoin reached an all-time high of $99,645, followed by a 7% correction that brought it down to $92,775. Although short-lived, this dip drew attention. Now trading at $94,600, analysts suggest this could be a healthy consolidation phase for Bitcoin.

Markus Thielen, CEO of 10x Research, stated, “Bitcoin is in a consolidation phase ahead of Thanksgiving. This process is critical to balance its overbought conditions.” He also noted that the Federal Reserve’s December interest rate decision could impact the market, but it would not alter the long-term bullish outlook.

BTC Markets analyst Charlie Sherry linked this dip to Bitcoin’s historical bull market patterns. Sherry remarked, “This correction is an opportunity for the market to consolidate gains and reduce leverage.” He suggested this movement could precede a major rally.

According to Polymarket data, Bitcoin has a 72% probability of surpassing $100,000 by the end of the year. Experts agree that this milestone is achievable, though short-term obstacles may arise.

CK Zheng, co-founder of ZX Squared Capital, echoed this optimism. Zheng stated, “This psychological resistance may lead some investors to take profits, but in the bigger picture, Bitcoin is likely to cross this threshold in a few months.”

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Rising Treasury Yields Prompt Portfolio Shift

Thielen attributes his bearish stance to rising Treasury yields, a sign of investor concerns about inflation.

“Our growing concern is that risk assets (stocks and crypto) are teetering on the edge of a significant price correction,” Thielen stated in a client note. “The primary trigger is the unexpected and persistent inflation. With the bond market now projecting less than three cuts and 10-year Treasury Yields surpassing 4.50%, we may have arrived at a crucial tipping point for risk assets.”

Selling Tech Stocks, Holding Select Crypto

Thielen’s bearish outlook led him to sell all his tech stocks and maintain only a few “high-conviction” cryptocurrencies in his portfolio.

Market expectations for Federal Reserve rate cuts have dwindled significantly this year. Initially priced in at six cuts, traders now anticipate less than three due to persistent inflation and a strong U.S. labor market and economy.

This “hawkish repricing” by the Federal Reserve has driven up 10-year Treasury yields to 4.61% – the highest since November 2023. This rise in risk-free rates makes high-risk assets like tech stocks and cryptocurrencies less attractive to investors.

Bitcoin Rally Fueled by Rate Cut Expectations Now Fizzles

“Most of this 2023/2024 bitcoin rally is driven by expectations that interest rates would be cut, and this narrative is being seriously challenged now,” noted Thielen. He further pointed out the decline in inflows into spot Bitcoin ETFs (exchange-traded funds).

The approval of nearly a dozen spot Bitcoin ETFs by the SEC in January allowed investors to gain exposure to Bitcoin without directly owning and storing the cryptocurrency. While these vehicles attracted nearly $12 billion in investments, the flow has stalled this month after fueling the earlier Bitcoin price surge.

Bitcoin ETF Hype Wanes, Net Inflows Dry Up

The 5-day average net inflows into spot ETFs have dropped to zero. Thielen suggests that “after an initial novelty hype, ETF flows tend to run out unless prices continue increasing—which they have not done since early March. With two—to 17% drawdowns, those investors might stay on the sidelines.”

Post-Halving Correction on the Horizon?

Some analysts predict a further correction after the hype surrounding the upcoming Bitcoin halving event on April 20th fades. This pre-programmed event will cut the block reward for miners in half, effectively reducing the pace of new Bitcoin entering circulation.

Despite the recent bearish sentiment, Bitcoin is still up 42% year-to-date, trading around $62,600. The broader crypto market index, CoinDesk 20, also remains positive for the year, currently at 2119 points.

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