Here is why pro-Crypto actions plunge despite the success of Bitcoin

The speculative momentum around Bitcoin comes up against the reality of the markets. Supported by the fervor of records and the unexpected support of Donald Trump, several listed companies having bet their financial strategy on the accumulation of BTC undergo a violent correction. Their actions sometimes fall below the value of their crypto assets, exposing the limits of a model resting almost entirely on the volatility of Bitcoin.

A brutal fall: Bitcoin values ​​unscrew

The euphoria which surrounded the listed companies accumulating Bitcoin has suddenly transformed into a stock market rout. These companies, which had seen their actions climb as the BTC reached new heights, today suffer a wave of massive sales.

Strategy, a figurehead of this strategy, saw its action fall by $ 457 in July to 328 dollars this week, reaching its lowest level since April. The dynamics are similar for other actors such as the Japanese company Metaplanet or the British company Smarter Web Company.

These reductions are part of a climate of generalized withdrawal on the Crypto market, marked by a fall in confidence and a strong nervousness of investors.

Like theexplain Adam McCarthy, analyst at Kaiko, “These companies are mainly betting on volatility, with a lever effect. If Bitcoin loses 3 %, their shares can drop from four to five times more ”.

This multiplied exhibition amplifies panic, especially among individuals, who sell in an emergency. “For private users, it is often a shock, which can worsen the decline when some sell out of fear”add McCarthy. Recent figures confirm the magnitude of the phenomenon:

• Strategy (United States): Action down 28 % since July, only earns 13 % over the year;

• Metaplanet (Japan): a fall of more than 60 % since its June summit, despite an annual gain of +105 %;

• Smarter Web Company (United Kingdom): a decline of more than 70 % since June, after a flight caused by the announcement of a Bitcoin strategy in April;

• Alt5 SIGMA (Canada/United States): Action down 61 %, despite the announcement of a $ 1.5 billion partnership with World Liberty Financial, a crypto project linked to Donald Trump.

These corrections show the fragility of a model founded almost exclusively on the performance of an asset as volatile as Bitcoin.

Structural faults: a model without safety net

Beyond the volatility inherent in the market, it is the structural fragility of these worried companies. Many of them have very little activity outside their exposure to Bitcoin.

“Beyond their exposure to Bitcoin, most of these companies have only modest fundamentals, their valuation therefore does not have a security cushion”Lale Akoner analysis, market strategists at Etoro.

This is particularly the case with Smarter Web Company, which was originally a website design company. The simple strategic turn towards Bitcoin had been enough to take off its action, but this dynamic turned out to be ephemeral.

In addition, there is their dependence on the capital markets. These companies finance their BTC purchases by issuing shares or debt. However, as Akoner points out: “Access to markets can dry up when feeling cools”.

This is what seems to have happened. The case of Alt5 Sigma is revealing. Despite the announcement of a $ 1.5 billion partnership with the Crypto World Liberty Financial project linked to Donald Trump, the action has lost more than 61 % since June, proof that even spectacular announcements are no longer enough to reassure the market.

This situation now exposes these companies to a double risk: a loss of confidence in investors and an inability to raise new funds. If the downward trend of the crypto market extends, some could end up with unbalanced and without new resources, which would accentuate their decline.