Original Title: Metaplanet Is Trading at $596,154 per Bitcoin—Time to Short?

Original author: 10x Research

Original compilation: jk, Odaily Planet Daily

Bitcoin has risen by $15,000 in just a few weeks—but the reasons are not what the market generally perceives. The stock price of a "little-known" Japanese listed company, Metaplanet, reflects an implied value of Bitcoin as high as $596,154, more than five times its actual market price. Meanwhile, the Asian trading session is quietly dominating the market narrative, and a dangerous net asset value (NAV) distortion is brewing beneath the surface of the market.

Volatility continues to decline, and the flow of retail investor funds is changing. The signals we are observing are highly similar to key turning points in history. Abnormalities are occurring, from Japan's bond market to currency flows and then to cryptocurrency holding tools (such as Metaplanet) — but these have yet to appear in mainstream news. If you are looking for the starting point of the next big market movement, this report is worth reading.

Bitcoin vs. MicroStrategy vs. Metaplanet - Who is Most Likely to be Overvalued?

Core Points:

· Bitcoin is undoubtedly one of the most disruptive innovations of the 21st century, but many misunderstandings surrounding it still persist widely. One of the most fundamental principles—"Not your keys, not your coins"—is rarely taken seriously. Today's market has strayed far from Satoshi Nakamoto's original vision of a "peer-to-peer electronic cash system."

· Today, billions of dollars of retail funds are trying to gain exposure to Bitcoin through various financial instruments, but many of these tools often require high premiums. In some cases, investors even inadvertently purchase Bitcoin at a price of 596,154 dollars, while the actual market price is only 109,000 dollars, resulting in a premium as high as 447%.

· Some of our market views have sparked controversy, but they have repeatedly been validated by the market as highly forward-looking. It is worth mentioning that in December 2022, we pointed out that Grayscale's GBTC was trading at a 47% discount to NAV (with Bitcoin price at that time being $18,000) and listed it as a key investment recommendation for 2023 (along with Solana, which was priced at $13.70 at that time). At that time, market sentiment was extremely pessimistic, with widespread concerns about an economic recession.

· On January 29, 2024, we published our view that "MicroStrategy may be a better investment than a Bitcoin ETF," when the company's share price traded at a 7% discount to the value of its Bitcoin holdings, effectively capturing the starting point for its subsequent market cap revaluation. We also noted on October 7, 2024 that MicroStrategy was on track for a breakout, when its stock price was $177 (it has now risen to $380).

Main Text

Most people have no idea what Net Asset Value (NAV) is, let alone that they may be paying an extremely high premium when gaining exposure to Bitcoin. Some investors believe they have obtained some kind of leveraged upside, similar to the logic of Wall Street selling gold mining stocks to retail investors: these stocks are packaged as leveraged bets on rising gold prices, especially when institutions need to sell stocks to retail investors.

Currently, MicroStrategy's stock price implies a Bitcoin price of $174,100. Although this premium is not extreme, it is still significant. After all, when there are Bitcoin ETFs available in the market providing exposure at actual market prices (around $109,000), who would still be willing to pay such a high price? The answer often lies in information asymmetry, a lack of understanding of NAV, or effective marketing rhetoric.

Whenever MicroStrategy issues new shares to retail investors, the Bitcoin value represented behind these shares only accounts for a small portion of its stock price. The company profits from the price difference and packages it as so-called "Bitcoin earnings." Existing shareholders are pleased with this because new investors are effectively purchasing Bitcoin indirectly at a price of $174,100 per coin, while the company uses this capital to buy BTC at market price. In the long run, this will dilute the net asset value (NAV) per share, and this cost will be entirely borne by the new shareholders.

Although the crypto media calls this operation a "masterpiece of financial engineering", the fundamental reason for this model is that most retail investors no longer buy full bitcoin directly, and now the price of one BTC is higher than that of a new car (more than $45, 000). Since the price of Bitcoin breached this psychological threshold, MicroStrategy's NAV has risen rapidly, underpinning its so-called "Bitcoin yield" strategy – but on the other hand, it's really "squeezing retail investors to finance their Bitcoin empire."

As we've previously noted, MicroStrategy's ability to buy Bitcoin by issuing additional shares is being limited as volatility declines and MicroStrategy's NAV is diluted. However, over the past month, the company has still managed to buy $4 billion worth of Bitcoin, an operation that is almost unmatched. In contrast, Japan's Metaplanet currently holds 7, 800 BTC (book value of about $845 million), but has a market capitalization of $4.7 billion, corresponding to an implied price of $596, 154 per bitcoin, despite the soaring stock price.

Given that its average acquisition cost is $91,343 per coin, a 15% drop in Bitcoin's price would entirely wipe out Metaplanet's paper profits. It is worth noting that the company was just a traditional hotel business valued at $40 million a year ago. With the appreciation of the yen (a decline in the USD/JPY exchange rate), increased capital repatriation, and Japan's economy entering a new phase, the decrease in foreign tourists may directly impact its core business—hotels. More importantly, the recent rise of Bitcoin by $15,000 primarily occurred after the Bank of Japan's policy meeting. During the meeting, the officials significantly lowered economic growth forecasts, while Japanese government bond yields soared and demand for bond auctions weakened. Meanwhile, various Asian currencies (such as the New Taiwan Dollar) appreciated significantly, despite officials denying any negotiations with the Trump administration regarding currency appreciation.

Increasing evidence suggests that the recent price movements of Bitcoin are primarily driven by the Asian trading session, possibly influenced by Michael Saylor's suggestive tweets about Bitcoin purchases or a surge in activity among Japanese retail investors. Over the past 30 days, Bitcoin has seen an overall increase of 16%, but during the Asian trading session, the increase has reached as high as 25%. In contrast, the US market session contributed almost nothing (prices remained flat), while the European session recorded a decline of 8%. This further indicates that Asia is currently the dominant force in Bitcoin pricing. If the flow of funds from Asia begins to weaken, Bitcoin may enter a consolidation phase.

It's worth mentioning that Google Trends shows that there is no widespread Bitcoin retail boom in Japan, suggesting that the parabolic rise in Metaplanet's share price may have been driven by a small number of speculative funds rather than popular enthusiasm. At its current market capitalization, the stock is trading at 5.47 times its NAV, or a 447% premium, providing an enticing opportunity for carry trade. Hedge funds can express their market views through a pairs trade: buy 5 BTC while shorting $550,000 worth of Metaplanet stock (about 70, 000 shares, 1,116 yen each, calculated at USDJPY 142). The attractiveness of such deals is rising, especially against the backdrop of Japan's expected approval of Bitcoin ETFs in the next 12 months, at which point Metaplanet's NAV premium is likely to compress significantly and valuations will become rational.

Although we accurately predicted the Bitcoin uptrend that started on April 12, we believe the current price level is a reasonable time to take profits. If the Bitcoin price breaks above $105,000, traders should consider reducing long positions.

The options market has issued a warning signal: the implied volatility skew of Bitcoin—i.e., the difference in implied volatility between call options and put options—has dropped to nearly -10%, indicating that the market is pricing call options significantly higher than put options. In other words, traders are actively chasing the upward trend rather than hedging against downside risk. In our experience, such extreme skew levels often reflect the market being in a state of extreme optimistic top sentiment, serving as a typical contrarian signal.

Our multiple technical reversal indicators (such as the Relative Strength Index RSI and Stochastic Indicator) are currently showing overbought signs and starting to reverse downwards, creating a divergence with the Bitcoin price. The current gap between the Bitcoin price and our trend signals has reached $20,000, and this gap is narrowing, indicating that market momentum is weakening. We have maintained a bullish view since mid-April (at that time it was a contrarian view), but now we believe it is wiser to reduce risk exposure and wait for a more favorable re-entry opportunity.

Chart Explanation: Bitcoin (left axis) and Random Indicator (right axis) - Divergence is widening

The rise over the past six weeks has indeed been impressive, but the core of trading is risk-adjusted return management, not blindly chasing trends. At the current overvalued levels, the last batch of Japanese retail investors buying Metaplanet may bear a heavy price.

Conclusion

Now is the time to lock in some of your profits. We recommended buying MicroStrategy's put spread on Friday, and the stock is down 7.5% so far, and the strategy has achieved a 66% gain. Next, Metaplanet looks likely to be the next target for a valuation correction in the coming months. Shorting it by hedging it with Bitcoin is an effective way to express this judgment. From a broader market perspective, as June approaches and the traditionally thin summer trading period begins, we believe Bitcoin itself could also enter a period of choppy consolidation. At this stage, we should pay more attention to profit realization and risk control, rather than blindly chasing high.

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