ABTC stock price surged on Wednesday after American Bitcoin started trading in New York. It initially went parabolic and reached a high of $14.50 before plunging and ending the day at $8. This article explores whether American Bitcoin is a good stock to buy.
What is American Bitcoin?
American Bitcoin is a company largely owned by the Trump family and Hut 8 Mining, one of the top Bitcoin mining entities in the United States.
It debuted in the public market on Wednesday after implementing a stock-for-stock merger with Gryphon Digital Mining. It is now an entity valued at over $250 million, with its Bitcoin holdings being 2,443 valued at over $273 million.
American Bitcoin is a MicroStrategy wannabe whose business is to accumulate as many Bitcoins as possible. The main difference is that its accumulation strategy includes mining operations, enabled through its partnership with Hut 8 Mining.
This model ensures that most of the Bitcoin it accumulates comes from mining operations rather than purchases in the open market. Asher Genoot, Hut 8’s chairman, said:
“By combining Bitcoin mining, opportunistic market purchases, and the backing of Hut 8’s energy and digital infrastructure, we have created a vehicle designed to drive rapid, efficient Bitcoin-per-share growth.”
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Is the ABTC Stock a Good Buy?
American Bitcoin launches at a difficult period for the industry. Bitcoin price has moved into a correction after falling by over 10% from its highest point this year.
At the same time, investors have fallen out of favor with Bitcoin treasury companies, with most of them being in the bear market. MSTR stock price has plunged by 40% from its highest point last year, while Metaplanet has dived by 60% from the YTD high.
Other companies in the industry, like GameStop, Semler Scientific, Trump Media, and MicroCloud Hologram, have all plunged by double digits in the past few months.
A likely reason for the collapse is that investors are no longer willing to pay a premium for a company whose business is to accumulate Bitcoin. In Strategy’s case, its Bitcoin holdings are worth $71 billion, while the enterprise value is worth $109 billion, creating a $38 billion gap.
Therefore, it is likely that the ABTC stock price will remain under pressure in the near term and only rebound when the Bitcoin price stages a strong comeback.
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