Altcoin Treasury Mania Pumps Stock Prices, But Underlying Tokens Remain Muted: Animoca
The post Altcoin Treasury Mania Pumps Stock Prices, But Underlying Tokens Remain Muted: Animoca appeared on BitcoinEthereumNews.com. Announcing an altcoin treasury plan has boosted company shares, but the altcoins themselves don’t share the same momentum, a new report finds. Stocks of companies that adopt an altcoin treasury strategy have surged, but the altcoins themselves do not show the same boost, according to Animoca Brands. In a recent research report, the blockchain gaming and investment company noted that share prices rose an average of 161% on the day of the announcement. This momentum has been sustained, with gains of 150% one day later, 185% after seven days, and 226% after 30 days. However, the report also revealed that many announcements focus on capital raising and planned altcoin purchases rather than completed transactions. As a result, there has been no significant buying pressure to boost altcoin prices, indicating that the stock rallies may reflect investors speculating on companies’ intentions rather than actual market activity. Impact of Altcoin Treasury Plans on Token Prices “Since the companies may not have initiated or completed their altcoin acquisitions within this timeframe, there was no actual buying pressure or influx of capital to potentially move the altcoin’s market,” Animoca Brands wrote. For example, when Interactive Strength announced plans to buy FET on June 11, the token fell 5.1% that day, and had dropped 14.1% a month later, according to data compiled by the firm. Mounting Risks The report also lists several risks tied to holding altcoins in corporate treasuries. These include market volatility and leveraged losses, meaning that large price swings in altcoins can significantly impact a company’s finances, especially if it uses debt. Moreover, liquidity and repayment challenges could also arise if altcoin prices stay low and bondholders demand repayment instead of converting debt to equity, the report notes. On top of that, there’s also a “collateral liquidation risk” if debt terms change…
The post Altcoin Treasury Mania Pumps Stock Prices, But Underlying Tokens Remain Muted: Animoca appeared on BitcoinEthereumNews.com.
Announcing an altcoin treasury plan has boosted company shares, but the altcoins themselves don’t share the same momentum, a new report finds. Stocks of companies that adopt an altcoin treasury strategy have surged, but the altcoins themselves do not show the same boost, according to Animoca Brands. In a recent research report, the blockchain gaming and investment company noted that share prices rose an average of 161% on the day of the announcement. This momentum has been sustained, with gains of 150% one day later, 185% after seven days, and 226% after 30 days. However, the report also revealed that many announcements focus on capital raising and planned altcoin purchases rather than completed transactions. As a result, there has been no significant buying pressure to boost altcoin prices, indicating that the stock rallies may reflect investors speculating on companies’ intentions rather than actual market activity. Impact of Altcoin Treasury Plans on Token Prices “Since the companies may not have initiated or completed their altcoin acquisitions within this timeframe, there was no actual buying pressure or influx of capital to potentially move the altcoin’s market,” Animoca Brands wrote. For example, when Interactive Strength announced plans to buy FET on June 11, the token fell 5.1% that day, and had dropped 14.1% a month later, according to data compiled by the firm. Mounting Risks The report also lists several risks tied to holding altcoins in corporate treasuries. These include market volatility and leveraged losses, meaning that large price swings in altcoins can significantly impact a company’s finances, especially if it uses debt. Moreover, liquidity and repayment challenges could also arise if altcoin prices stay low and bondholders demand repayment instead of converting debt to equity, the report notes. On top of that, there’s also a “collateral liquidation risk” if debt terms change…
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