American Bitcoin stock price tanked by as much as 50% on Tuesday, making it one of the top laggards in Wall Street. ABTC tumbled to $2, down from the year-to-date high of $14.49. This plunge has wiped out billions of dollars in value in the past few months.
Why American Bitcoin Stock Price Crashed
It was unclear why the ABTC stock tanked on Tuesday since the industry was relatively strong. Bitcoin price was up by over 7% as it recovered all the losses it had made the day before. Top Bitcoin treasury companies like Metaplanet, Strategy, and Microcloud Hologram were all in the green.
One possible reason why the American Bitcoin stock price crashed is that one or few investors and insiders may have started selling. This is evidenced by its single-day volume surge, which soared to over $100 million. In an X post, Eric Trump noted hat the pre-merger private placement unlocked, allowing early investors to sell.
Another reason is the view that ABTC was getting overvalued as its mNAV remains at 5x. In contrast, companies like Strategy and Metaplanet have seen their mNAV drop below 1.
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Additionally, there are concerns about Trump-related assets, which have plunged recently as his approval rating has continued falling. The Trump Media stock price has dropped by over 70% this year. Similarly, his tokens like Official Trump (TRUMP), Melania, and WLFI have underperformed the market.
Technicals also explain why the American Bitcoin stock price has crashed. As the chart below shows, the stock formed a large double-top pattern at $14.50 and a neckline at $3.70. The crash happened when it moved to this neckline.
Measuring the distance between the double-top level at $14.50 and the neckline at $3.70, and then the same one from the neckline points to more downside. The stock may crash to the psychological point at $1 or below.
ABTC stock price chart | Source: TradingView
Is it Safe to Buy the ABTC Stock Dip?
The American Bitcoin stock price has suffered a big dip in the past few months as demand for treasury companies has waned.
However, the company has some good fundamentals. For example, unlike other treasury companies, it has two main businesses: mining and accumulation.
The company has a large mining operation that normally produces new coins at a 50% discount to the spot price. It has a 56% gross margin, which explains why its business reported strong results.Its revenue rose to over $64 million, while its profit was over $3.5 million.
ABTC sells some of the coins it mines and then accumulates some, a move that benefits when Bitcoin is rising.
Still, while the company has some strong fundamentals, technicals suggest that it will continue falling in the near term.
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