Is Metaplanet Setting The Stage For A Bitcoin Boom With Its Latest Bond Strategy?

• Metaplanet will issue ¥1 billion in bonds to buy Bitcoin.
• Analysis of Bitcoin market fundamentals suggested limited impact on the overall price.

Despite a recent decline in Bitcoin [BTC] price, impacting the broader cryptocurrency market, Japanese firm Metaplanet is doubling down on its Bitcoin strategy.

At press time, BTC was trading at $62,825, reflecting a 2.3% decline over the past 24 hours and a 3.2% decline over the past week.

Despite these market conditions, Metaplanet has revealed plans to significantly strengthen its Bitcoin holdings.

Investment details

Early on June 24, Metaplanet announced a strategic move to issue ¥1 billion ($6.2 million) in bonds at a modest 0.5% interest rate to buy Bitcoin.

This signaled a strong commitment to integrating cryptocurrency into its asset management strategy. Part of Metaplanet’s announcement read,

Metaplanet Inc. (3350:JP) announces that the Board of Directors has decided to purchase 1 billion yen worth of Bitcoins as of today’s meeting. The funds for this acquisition will be distributed from the capital raised through the issuance of the second series of ordinary bonds (guaranteed), as disclosed today separately in the “Notice of the Issuance of the Second Series of ordinary bonds (guaranteed). “

Metaplanet further clarified its financial strategy regarding BTC investments, indicating that BTC designated for long-term holding will be recorded at purchase cost.

This makes them exempt from market value tax at the end of the fiscal year. In contrast, other Bitcoin assets will be regularly valued at market value every quarter, with any gains or losses affecting non-operating financial results.

Despite a general policy of holding BTC for long periods, the company noted that any Bitcoin used for operational purposes will count as a current asset on their balance sheet.

Notably, the decision to buy more Bitcoin through bond issuance links Metaplanet with notable companies like MicroStrategy, which have adopted similar strategies to increase their BTC reserves.

In April, Metaplanet first added Bitcoin to its balancefollowing MicroStrategy’s approach of using debt financing to purchase Bitcoin.

The firm’s shift to significant cryptocurrency investments marks a transition from its previous focus on operating budget hotels.

The move is part of a broader strategy to reduce the company’s dependence on the weakening Japanese yen, which has hit its lowest level against the US dollar since 1990.

Impact on Bitcoin?

With Metaplanet’s significant financial commitment to Bitcoin, the question remains whether a ¥1 billion ($6.2 million) Bitcoin purchase will significantly affect the market.

To assess this, it is essential to consider Bitcoin’s fundamental metrics, particularly the current dynamics of supply and demand.

Observation of circulating supply, which has been stable growingreveals that the proposed purchase would make up only a small portion of the total market, suggesting that it may not dramatically affect the price of Bitcoin.

Source: Glassnode

In addition, it is essential to examine the demand side, especially trends in foreign exchange outflows. Data by CryptoQuant shows a 1.75% increase in this metric over the past 24 hours.

However, a broader look revealed a one-month decline in outflows, indicating a reduction in buying pressure.

Source: CryptoQuant

On June 23, around 7,852 BTC left the exchanges – a sharp drop from the 80,000 BTC seen on May 28.

Read Bitcoin [BTC] Price Forecast 2024-25

This trend, coupled with recent predictions from AMBCrypto that BTC could fall to $61k, suggested that while Metaplanet’s investment is unlikely to cause significant price moves on its own.

It is part of a wider market context where demand appears to be waning.