Metaplanet Stock Surges 300% Amid Short Squeeze and Bitcoin Buying Spree

Metaplanet, a prominent Bitcoin-focused stock in Japan, has seen significant price surges recently, driven by a combination of factors including aggressive Bitcoin purchases and a potential short squeeze. The stock has hit its daily price limit on the Tokyo exchange for three consecutive days, making it difficult for short sellers to cover their positions. This situation has led to mounting losses for short sellers, with some facing losses exceeding 300%.

Richard Byworth, a well-known crypto investor, has highlighted that Metaplanet's current stock price is undervalued despite the recent surge. The stock is trading at just over 5 times its net asset value based on Bitcoin holdings, which is significantly lower than MicroStrategy, a U.S. company with substantial Bitcoin holdings, which trades at 1.75 times its Bitcoin value. Byworth suggests that if Metaplanet's price doubles to around $21, it would be valued similarly to MicroStrategy on a Bitcoin asset basis, but still below its highest valuation in the past.

Metaplanet's aggressive Bitcoin buying strategy has resulted in a Bitcoin yield that is over 11 times higher than MicroStrategy's based on recent purchases. This aggressive buying, coupled with macroeconomic trends such as rising bond yields in the U.S. and Japan, which often lead to lower interest rates, is creating a favorable environment for Bitcoin and related stocks. Lower interest rates tend to be beneficial for Bitcoin and related investments, further boosting investor interest in Metaplanet.

One of the key attractions for Japanese investors is the tax advantage offered by Metaplanet. Holding Bitcoin directly in Japan can be expensive due to high capital gains tax rates, which can reach up to 55%. However, investing in Metaplanet through Japan’s NISA accounts allows investors to avoid capital gains tax on up to about $25,000 a year. This tax benefit, combined with the lack of other easy ways for retail investors to gain exposure to Bitcoin via the stock market, has made Metaplanet a popular choice among Japanese investors.

With nearly 30% of its shares sold short, Metaplanet is the most shorted stock in Japan. The rising stock price has trapped short sellers, making it difficult for them to cover their positions. When the daily price limits are lifted, there is a potential for a significant price move, known as a short squeeze, which could push the stock much higher. This, combined with strong buying interest from investors, suggests that Metaplanet could see more substantial price movements in the near future.