The stock price of American Bitcoin, associated with Trump, plummeted over 40% on Tuesday, marking its lowest point since May of this year.
Summary
- The price of American Bitcoin dropped over 40% on Tuesday.
- This dip is particularly striking as Bitcoin itself was on the rebound.
- The crash appears to be driven by technical factors and panic selling.
Reasons Behind the American Bitcoin Stock Crash
The price of ABTC stock fell to $2, a staggering 86% drop from its peak earlier this year. This decline has reduced its market capitalization from $8.6 billion to $1.9 billion.
This sharp fall coincided with a day of recovery for Bitcoin (BTC) and various altcoins, with Bitcoin’s price rising by over 4.5% to breach the critical resistance level of $90,000.
American Bitcoin’s decline is juxtaposed with the surge of other companies in the Bitcoin treasury sector. MSTR stock climbed over 4%, while Trump Media witnessed a 1% increase. Stocks like Bullish and GD Culture also saw rebounds.
Typically, companies holding Bitcoin do well when BTC is in an upward trend, as this enhances the value of their assets.
American Bitcoin, which originated from Hut 8 Mining and was co-founded by Eric Trump, holds a substantial BTC stash of 4,002 coins. These coins are presently valued at over $363 million, significantly under its market cap.
There wasn’t a singular trigger for today’s ABTC crash, suggesting that it might be the result of selling pressure and panic among retail investors, who have faced considerable losses since the company’s IPO.
The stock may also be adversely affected by a higher valuation multiple compared to competitors. For instance, while Metaplanet and Strategy show a negative mNAV ratio, ABTC possesses a multiple of 5.
This elevated multiple can likely be attributed to its distinct business model, which focuses on accumulating Bitcoin through mining operations instead of purchasing it from external sources.
Recent reports indicate that the company’s revenue reached $64 million in the third quarter, with a net income of $3.4 million.
Technical Analysis of ABTC Stock Price
The daily chart indicates that the ABTC stock price has experienced a downturn in recent months. This decline followed a double-top pattern at $14.50, with a neckline at $3.70, marking its lowest level in June. A double-top often signals further declines.
The stock continues to trade below the 50-day moving average, while the Average Directional Index has climbed to 23, its highest level since October, forming a death cross as the 50-day and 200-day moving averages intersected.
Consequently, the double-top pattern suggests further declines, potentially reaching the psychological benchmark of $1.50.
