The Turkish lira continued its slow downtrend and reached its all-time low as traders waited for the upcoming interest rate decision. The USD/TRY exchange rate rose to 41.94, up by almost 20% from its lowest point this year. It has soared by over 450% in the last five years.

Why the Turkish lira is crashing

The Turkish lira has been in a strong downtrend for decades because of the lack of independence of the central bank. Unlike in other countries, the Turkish president has the power to hire and fire the central bank at will, a role that Erdogan has used well in the past few years.

Forex analysts believe that the central bank has allowed the currency to fall as long as the decline is lower than the inflation rate. 

There is a belief that a weaker lira is good for the economy as it makes its goods cheaper to other countries. Also, a weaker currency is good for the tourism industry as many foreigners, especially in locations and hotels that accept local currency.

Analysts believe that the Turkish lira will continue its freefall as it has done in the past decades. In a statement, a senior portfolio advisor at East Capital Group said:

“We believe the central bank will aim to maintain the link between the pace of inflation and the lira’s depreciation. This should result in a relatively predictable and consistent depreciation path, implying high but gradually declining real returns.”

CBRT interest rate decision ahead

The next key catalyst for the Turkish lira will be the upcoming interest rate decision by the Central Bank of the Republic of Turkey (CBRT), which will happen on Thursday next week.

This will be a closely-watched interest rate decision as it comes after a recent report by the central bank noted that inflation was still high.

The headline Consumer Price Index (CPI) rose to 33.29% in September, much higher than what most analysts were expecting. This surge happened as food, housing, and education costs continued rising.

On the positive side, the inflation surge may have been temporary as September coincided with the reopening of tertiary institutions, a period when prices typically rise.

Still, analysts believe that CBRT will opt to slow down the pace of interest rate cuts. It slashed rates by 250 basis points in September after slashing by 300 basis points in July. The expectation is that it will cut rates from 40.5% to 39.5% in the upcoming meeting.

USD/TRY technical analysis 

USD/TRY chart | Source: TradingView

The weekly chart shows that the USD/TRY exchange rate has been in a strong uptrend for a long time. Most recently, it has jumped in all weeks since March.

As a result, the pair has remained much higher than all moving averages, while the Relative Strength Index has remained above the overbought level since May 2022.

Therefore, the most likely scenario is where the pair continues rising as bulls target the next key resistance level at 42. A move above that resistance level will point to more gains, potentially to 45 in 2026.

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The DAX Index has remained in a tight range in the past few weeks as the recent bull run faded. It was trading at €23,766, down a bit from the year-to-date high of €24,635. It has jumped by 30% from its lowest point this year. 

This article explores some of the best DAX Index constituents to watch next week, including popular names like SAP, BASF, Linde, Beirsdorf, and Porsche. 

SAP 

SAP share price has plunged by over 18% from its highest point this year as it continues to underperform other top software companies like Microsoft and Salesforce. 

The stock also dropped after becoming a target of an investigation by European regulators, who cited its anticompetitive practices. If found guilty, the company could be fined up to 10% of its global sales. 

EU officials allege that SAP may have used improper business strategies to prevent other companies from competing in the industry. SAP has already offered concessions to regulators. 

The most recent results showed that the company’s business did well in the last quarter. Its cloud backlog jumped by 22% to €18.1 billion, while its cloud and ERP revenues jumped by 24% and 30%. Its total revenue rose by 9% in the second quarter.

SAP has also continued to repurchase its stock as part of the €5 billion program that ends in December. The management will likely announce a new authorization when it publishes its results on Tuesday.

Read more: SAP brings OpenAI to German public sector via Delos Cloud

BASF 

BASF, the biggest chemical company in the world, has plunged by almost 20% from its highest level this week. This decline happened partly because of Donald Trump’s tariffs and the weakness in its key markets like Europe, China, and the US.

The most recent results showed that the company’s revenue dropped to €33.2 billion in the first half of the year from €33.7 billion in the same period last year.

The company’s profitability also weakened during the period as the EBITDA dropped to €4.4 billion from €4.7 billion in the same period last year. Most importantly, the company suffered a cash outflow of €1.3 billion.

BASF also lowered its forward guidance for the year. It now expects that the EBITDA will be between €7.3 and€7.7 billion. Therefore, the upcoming results will provide more color on the company’s performance and whether the turnaround efforts are working.

Porsche 

Porsche share price has crashed this year and is now down by 32% from its highest level this year. It has also dropped by over 13% from its highest level in September.

The company has plunged because of its slowing sales in key markets in Europe and Asia. It is also the most exposed company in the United States because of Donald Trump’s tariffs as it has no manufacturing plants there. Also, the US has become its fastest-growing market, meaning that tariffs could slow this momentum.

The company has announced a series of measures to boost its growth, including slowing the pace of electric vehicle rollout. Therefore, its results on Friday will show whether its strategy is working out well.

The other three DAX Index companies to watch will be Linde, Beiersdorf, and MTU Aero Engines. MTU Aero will be notable as the stock is about 50% above the year-to-date low and the civil aviation industry is doing well.

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Ferrari stock price has crashed into a bear market this year after plunging by over 25% from its highest point in July. RACE was trading at $392, lowering its market capitalization to $94 billion, down from $124 billion in March. This article explores the top reasons why the stock has dropped recently. 

Ferrari stock has crashed because of Donald Trump’s tariffs

One reason why the Ferrari share price has crashed this year is because of Donald Trump’s tariffs. Like Porsche, Ferrari is highly exposed because it does all its manufacturing in Italy, and the US is one of its biggest markets. It made 993 million in the Americas, which includes the US.

Trump has put in place a 15% tariff, a move that has pushed the company to increase prices by up to 10% on some models to offset the tariff costs. It is likely that the company’s sales will be hurt in the US in the coming quarters.

Slowing growth to continue, as showed by its 2030 strategic plan

The other main reason why the Ferrari stock price has plunged is that analysts expect that its business will deteriorate for a while. 

In its most recent results, the company said that its revenue rose by 4% to 1.78 billion euros, while its operating profit jumped by 8% to 552 million euros. The net profit rose by 3% to 425 million euros. 

Analysts expect that the company’s growth trajectory will fade this year. The average estimate is that its revenue will be 1.71 billion euros in the current quarter, up by 3.8% from the same period last year. Also, the annual revenue is expected to be 7.1 billion euros. 

At the same time, the company published a weaker-than-expected strategic plan for 2030. It plans to have 40% ICE by 2030, 40% hybrid, and 20% electric. Before the strategic statement, the company hoped to have EVs make about 40% of its sales.

Also, the company hopes to have 90,000 active clients, up by 20% from 2022. This target was lower than what analysts were expecting.

Valuation reset is going on

Ferrari stock price has also dipped as it goes through a valuation reset. At its peak, the company had a market capitalization of over $124.98 billion, which was much higher than its peers and it real fundamentals. It had a price-to-earnings ratio of 60, a high premium for a company with single-digit growth rate. 

The ongoing crash is part of the valuation reset, which has brought its price-to-earnings ratio to 37. It is common for highly valued companies to drop as its valuation moves to the ideal location. 

This crash has also coincided with the falling value of some of its vehicles such as the Purosangue and SF90 Stradale.

Ferrari stock price technical analysis

RACE stock chart | Source: TradingView

The daily timeframe chart shows that the RACE stock price also plunged after finding a strong barrier at around $505. It formed a giant triple-top pattern on that level and has now settled at its neckline.

The stock has now formed a death cross pattern, which happens when the 50-day and 200-day Exponential Moving Averages (EMA) cross each other. Therefore, the most likely scenario is where the stock continues falling as sellers target the psychological point at $350. 

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The S&P 500, Dow Jones, and Nasdaq 100 indices and their exchange-traded funds (ETF) future continued their strong downward trend on Friday. Futures tied to the three indices fell by 60, 275, and 265 points, respectively. 

This crash is a continuation of what happened on Thursday when they plunged by 0.63%, 0.65%, and 0.50%. Here are some of the top reasons why the indices are falling and whether it is safe to buy the dip. 

Stock market has crashed as regional banks tumble

The first main reason why the S&P 500, Dow Jones, and the Nasdaq 100 indices is the rising concerns about regional banks and the credit market.

Fears of the credit market have been going on for a while as the private credit sector has boomed. Data shows that over $1.5 trillion has moved to private credit sector, a figure that is expected to hit $3 trillion in the next few years. 

Fears of the credit sector have continued after the recent collapse of First Brands, which had over $12 billion in borrowings. 

The fears continued this week after Zions Bank and Western Alliance announced that they were victims of fraud. As a result, there are concerns that the industry could be in more trouble. 

These concerns have sent memories of 2023 when companies like First Republic and Silicon Valley Bank (SVB) crashed. This explains why the short interest in the SPDR S&P Regional Bank ETF has jumped to 30%.

Still, on the positive side, the two companies have cited fraud as the main reason for their woes, meaning that this is not a systemic issue. 

Government shutdown continues

The S&P 500, Dow Jones, and Nasdaq 100 indices have also fallen as concerns about the government shutdown continues. The Senate failed in its bid to have it open, meaning that the shutdown will likely go on for a while. 

This shutdown will have an impact on the US economy, with estimates suggesting that it is costing the GDP over $70 billion a week. 

Still, on the positive side, the longer the shutdown continues will raise the odds of the Federal Reserve cutting interest rates in the coming meetings.

US and China trade war

The other notable bearish catalyst for the three indices is that there is still a risk that the US-China trade conflict will go on for a while. 

China announced tariffs targeting US ship earlier this week. This was on top of the other retaliatory measures it announced last week. They included tariffs on US ships moving to China, limits to rare earth materials, and an investigation into Qualcomm.

Why the Dow Jones, S&P 500, and Nasdaq 100 will rebound

There are a few reasons why the three indices will bounce back after this crash ends. First, they will rebound as the issues in the regional banking sector are not systemic. 

Second, American companies have published strong financial results so far. This includes numbers by companies like JPMorgan, Morgan Stanley, Citigroup, and Wells Fargo. Analysts expect the earnings season will be better-than-expected.

Third, bond yield are falling, signaling that market participants expect the Fed to cut interest rates in the coming meetings. The stock market does well when the bank is cutting rates.

Additionally, history shows that the stock market normally bounces back after experiencing a drawdown. 

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The crypto market crash that started on Friday accelerated this week, with top coins being in the red. Bittensor (TAO) price plunged by 14%, while Aster, Immutable, Zcash, PancakeSwap, and DoubleZero being the top laggards. This article explains some of the top reasons why the crypto crash is happening.

Crypto market crash happened after last week’s liquidations 

The crypto market crash is happening as stocks jump as investors focus on last week’s liquidations. On Friday, over 1.6 million traders were liquidated, with the total amount rising to almost $20 billion. 

Some analysts, including Tom Lee, argue that the liquidation amount was much higher than the reported figure and pointed to the risk of leverage in the crypto industry.

Therefore, altcoins are falling as investors and traders keep off after the crash last week. Some people who were wiped out have opted to keep off the industry completely or to participate in it by just buying and holding Bitcoin.

This explains why liquidations have slowed despite the ongoing crash. CoinGlass data shows that liquidations dropped by 28% in the last 24 hours to $444 million. Also, the volume in the perpetual exchanges like Aster and Hyperliquid has dropped.

Altcoins falling as Fear and Greed Index retreats 

The other main catalyst for the ongoing crypto market crash is that investors have embraced a sense of fear. The Crypto Fear and Greed Index has plunged to the fear zone of 32, much higher than this month’s high of 55. 

This index looks at the overall sentiment in the crypto industry, including the market sentiment, price momentum, derivatives market, and volatility has plunged.

The fear is also happening in the broader market. Data compiled by CNN Money shows that the Fear and Greed Index has dropped to the fear zone of 30, with the stock price breadth, market volatility, junk bond demand, and safe-haven demand moving to the extreme fear zone. 

Put and call options and stock price strength have all moved to the neutral zone. Historically, the stock and crypto market normally underperforms when there is a sense of fear in the market.

Trade jitters and Federal Reserve impact

The crypto market crash is happening as investors focus on the ongoing trade issues between the United States and China. Recently, China has started to push back harder against the United States.

The country has rejected American soybeans, while announcing an investigation into Qualcomm, initiated export controls of rare earth metals, and warned of retaliation against any actions by the United States. 

All this will have an impact on inflation in the United States at a time when the Federal Reserve is thinking of cutting interest rates. Analysts expect that the Fed will cut rates in the coming meetings. 

Therefore, the trade jitters and inflation worries mean that the Fed will not cut rates at a faster pace as expected. 

Will crypto prices go back up?

Now, with the crypto market crash accelerating, the question is whether the prices will bounce back. History shows that crypto prices tend to bounce back after crashing in a certain period. 

For example, Bitcoin and the cryptocurrency market plunged after the tariff announcement on Liberation Day in April this year. A month later, the Bitcoin price rebounded and hit a new all-time high. 

Similarly, cryptocurrencies plunged at the onset of the Covid-19 pandemic and then staged one of the longest rallies after that. 

Additionally, there are potential catalysts in the crypto industry, including the upcoming altcoin ETF approvals, potential interest rate cuts, and buying the dip. 

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Barclays share price has moved sideways this week as investors focus on the ongoing earnings by its biggest American peers like JPMorgan, Goldman Sachs, and Morgan Stanley. BARC was trading at 380p, inside a range it has been in the past few days. This price is about 72% above the lowest level in April.

US bank earnings are tailwinds for Barclays 

A potential catalyst for the Barclays share price this week is the ongoing earnings by the biggest American banks, which have published strong numbers across the board.

Bank of America, the second-biggest bank in the US, published strong numbers, with its net income soaring by 23% to over $8.47 billion. This growth was driven by a 43% surge in its investment banking business, which made $2.05 billion.

Similarly, Morgan Stanley said that its revenue rose to $18.2 billion in the third quarter, higher than the median estimate of $16.7 billion. Its earnings per share was $2.80, also higher than the expected $2.10. 

The company’s fixed income, commodities, and forex had strong growth because of the recent volatility. Its investment banking revenue jumped by 44% to $2.1 billion, while the wealth management rose by 13% to $8.23 billion.

JP Morgan, to biggest bank in the US, also released strong numbers, with its investment banking revenue rising by 16% and its markets division growing by 25%.

Other American banks like Citigroup, Goldman Sachs, and Well Fargo released solid numbers, pushing their stock prices higher. The closely-watched SPDR S&P Bank ETF (KBE) and the Invesco KBW Bank ETF (KBWB) have jumped to their highest levels in months.

Implication for Barclays 

Results by American mega banks always imply Barclays because of their similar business models, especially in the important investment banking division.

These numbers mean that the company’s investment banking business will do well when it publishes its results later this month. The most recent results showed that the investment banking division made over £7.1 billion in revenues, a 13% increase from the same period last year. 

It was its second-best performing division after UK Corporate Bank, whose revenues rose by 14% to £1 billion. Barclays UK made £4.1 billion, while the private bank and wealth management made £697 million. 

A closer look at its investment banking division shows that its FICC and equities divisions rose by 23% and 16% in the first half of the year. Results by American banks mean that Barclays will keep doing well. 

The most recent consensus figure posted on its website shows that analysts expect that its total income rose to £7 billion in Q3, while the profit after tax rose to £1.65 billion. Its investment banking revenue is expected to be £3 billion in Q3, £12.9 billion, £13.1 billion, and £13.5 billion in the next three full years.

Barclays share price technical analysis 

The daily chart shows that the BARC stock price has done well in the past few months. It has jumped from a low of 221p in May to 380p today. 

Most recently, the stock formed an ascending channel and remained above all moving averages. It has also formed a small bullish flag pattern, which is a common continuation sign. 

Therefore, the most likely outcome is where the stock keeps rising, with the next key level to watch being the psychological point at 400p.

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Atlassian stock price continued its strong downtrend this month and is now hovering at its lowest point since August last year. TEAM plunged to a low of $149.40, down by 55% from its highest point this year. This crash has brought its market cap from over $85 billion to $40 billion. 

Why Atlassian stock price has plunged

Atlassian share price has been in a strong downtrend in the past few months as concerns about its growth have continued. Its downtrend has accelerated after the company launched its acquisition of The Browser Company, the creator of Arc and Dia browsers in a $610 million deal. 

It also recently acquired DX in a $1 billion deal. DX offers engineering intelligence and AI-driven productivity solutions. Atlassian hopes that these products will help to complement its existing solutions like Jira, Trello, Confluence, Loom, Compass, and Bamboo. 

The most recent results showed that Atlassian’s revenue rose by 22% in the fourth quarter to $1.13 billion. This increase brought its annual revenue to $5.2 billion, up by 20% from 2024.

Analysts expect that the company’s growth will continue to decelerate in the coming quarters. The average estimate among 28 analysts is that its revenue will grow by about 18% to $1.4 billion. 

The second-quarter revenue growth is expected to be 17% to $1.51 billion. Analysts believe that the annual revenue will be $6.17 billion, up by 18% from the last fiscal year, which is a sign that the company is losing momentum. 

The Atlassian stock price has also plunged because of the ongoing selling by insiders. Its insiders have executed 135 sells of 989,384 shares in the last 3 months. At the current price, they have sold shares worth over $148 million. These insiders, who include the CEO, have sold over 4 million shares worth over $600 million in the last 12 months. 

This selling, which seems coordinated, could be part of estate management. However, it is always hard to recommend buying shares of a company whose management is actively selling. 

TEAM stock valuation analysis 

Another common issue that has dragged the TEAM stock price has been in a strong downtrend is that it is highly valued. The forward price-to-earnings ratio stands at 34, which is higher than the sector median of 24. The PEG ratio has jumped to 1.70, much higher than other companies.

One of the best ways to value the company is using its rule-of-40, which looks at its growth and margins. The net income margin is minus 4.9%, while its revenue growth of about 22%. Therefore, there are signs that valuation concerns remain. 

Atlassian share price technical analysis 

TEAM stock price chart | Source: TradingView

The daily timeframe chart shows that the TEAM stock has been in a strong downtrend in the past few months. It has dropped from a high of $326 in March to the current $150. 

The stock has formed a descending channel. It has moved below the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bears are in control. 

The stock has formed a descending channel. Also, the Relative Strength Index (RSI) and the Stochastic Oscillator have continued falling.

Therefore, the most likely scenario is where it continues falling as bears target the key support at $100. A move above the resistance at $160 will invalidate the bearish view.

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Rigetti Computing stock price has gone vertical in the past few month, helped by the ongoing hype surrounding the quantum computing industry. This growth has pushed it from a penny stock trading below $1 into a $17 billion company. 

Why Rigetti stock price is soaring

Rigetti and other companies in the quantum computing industry, like IonQ and D-Wave, have been in a strong surge since 2024. These gains have happened as investors predict that this type of computing will be the next big theme in the technology industry. 

The thinking is that investors will start focusing on the quantum computing once the AI theme fades. This view has been supported by reports from top companies like McKinsey and Bain that have predicted that quantum computing will help solve some of the biggest solutions in the world today. This view is supported by top experts in the industry, like Michio Kaku, who have been working in technology for decades.

Rigetti Computing stock price surged on Monday as investors cheered a report by JP Morgan, which said that it would invest at least $10 billion in companies in sectors important to the US economy. This plan is part of the company’s $1.5 trillion strategy known as the ‘Security and Resiliency Initiative.’

On this, it will allocate cash to firms in areas like supply chain and advanced manufacturing, defense and aerospace, energy, and frontier technologies. Quantum computing is one of the frontier technologies. As such, investors believe that Rigetti could be one of the companies that will receive this investment.

RGTI exposes the quantum computing bubble 

Still, the main risk that Rigetti Computing stock faces is that the company is exposing the bubble in the quantum computing industry.

A bubble is defined as a situation where companies in a certain industry surge irrationally because of euphoria among market participants rather than strong fundamentals.

In Rigetti’s case, the euphoria is driven by the view that it will become one of the top players in the quantum computing industry. This surge is not supported by any fundamentals, especially now that the company has a market capitalization of over $17 billion.

The most recent results showed that the company made just $1.8 million in the second quarter, down sharply from the $3 billion it made in the same period last year.

Rigetti Computing made $3.2 million in the first six months of the year from $6.1 million in the same period last year.

The average estimate of the 7 analysts tracking the company is that its revenue this year will be $8.13 million, down by 24% from last year. They then expect it to make $21 million next year, a 164% annual surge, helped by the upcoming 100+ qubit chiplet.

Despite this, the company is expected to continue losing substantial sums of money in the long term. It will lose 18 cents per share this year and 16 cents next year. It is hard to justify a $17 billion valuation on a loss/making company with less than $30 million in annual revenue.

The options market also point to more downside for the company with the put-call ratio of 1.06, a sign that there are more put that there are more puts than calls.

Rigetti Computing stock technical analysis 

RGTI stock chart | Source: TradingView

The daily timeframe chart shows that the Rigetti stock price has gone parabolic in the past few months. It has now become highly overbought as the Relative Strength Index and the MACD indicators surging to their extreme levels. Highly extreme assets tend to pullback over time.

The stock has remained significantly above the 50-day and 200-day Exponential Moving Averages, meaning that it may go through mean reversion in the coming weeks as investors start to book profits.

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The crypto market remained on edge on Wednesday morning as investors focused on the ongoing trade conflict between the United States and China, the two biggest economies globally. The crash also happened as investors reacted to last week’s liquidations, which affected at least 1.6 million traders. 

This article provides a forecast for popular tokens like Aster, Shiba Inu (SHIB), and Pi Network (PI).

Shiba Inu price prediction 

Shiba Inu, the biggest meme coin in the Ethereum network, has come under intense pressure in the past few months as it crashed from last November high of $0.00003323 to the current $0.00001067.

All attempts to rebound faced substantial rejections in May, July, and September this year. As a result, the coin formed a descending triangle pattern whose upper side connects the highest swings in these three months. The lower side of this pattern was at 0.00001062. A descending triangle often leads to a strong bearish breakout.

Shiba Inu price crashed below the support on Friday as the crypto market crash intensified. It has now bounced back to this level as it formed a break-and-retest pattern, which is a common continuation sign.

Shiba Inu price remains below the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bears are in control. Therefore, the most likely scenario is where it continues falling, with the next point to watch being at $0.000000698, its lowest level on Friday. 

Aster price forecast 

Aster is a top cryptocurrency project that has become a major competitor to companies like Orderly and Hyperliquid. It is a perpetual DEX handling billions of dollars a day.

Aster has become a popular name because it was built by former Binance employees, and Changpeng Zhao, popularly known as CZ, has become an advisor. His YZI Labs has invested in the company.

Aster token price has come under pressure in the past few days after it suffered a major delisting from DeFi Llama, a popular data aggregator, which cited its wash trading practices.

The Aster price has plunged after peaking at $2.4350 in September to the current $1.4713. Aster price formed a giant double-top at $2.2696 and a neckline at $1.5075. A double-top is one of the most bearish patterns in technical analysis.

It has now formed a break-and-retest pattern by bouncing back to the neckline at $1.5075, where it is today. Therefore, the token will likely continue falling as sellers target the next key support level at $1.0940, its lowest point on October 10.

Pi Network price technical analysis 

Pi Network price has been in a strong downward trend since February this year, when the developers launched the mainnet. The crash happened as many pioneers who were mining the token for years sold them. 

It also happened as the number of tokens being unlocked jumped, which led to substantial inflation in the network. Most importantly, Pi Network does not have any utility, with just a handful of people using apps in its network. As such, it has not achieved the goal that the developers set in the first place.

After initially peaking at $3 in February, the token plunged to an all-time low of $0.1538 on Friday.

Pi Network price then rebounded slightly to the current $0.2135. It has moved below the 50-day and 100-day Exponential Moving Averages (EMA).

The token has also formed a bearish flag pattern, which often leads to more downside. Therefore, barring any new development, the token will likely continue falling as sellers target the next key support at $0.1538 followed by the psychological level at $0.100.

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The Metaplanet share price has been in a strong downward trajectory this year, and is now hovering at the lowest point since May this year. It has plunged by over 70% from its highest point this year, erasing billions of dollars in value. This article explores why it is in freefall.

Metaplanet share price has crashed as Bitcoin treasury companies dive

The Metaplanet stock price has been in a strong downward trajectory as investors sour on Bitcoin treasury companies, with some investors describing this as the bursting of the treasury bubble. 

Michael Saylor’s Strategy stock price has plunged by 35% from its highest level this year and by 45% from its highest point in 2024.

MicroCloud Hologram stock price has plunged by over 98% from its highest level in December when it unveiled its Bitcoin treasury strategy. Other companies that have plunged this year are the likes of Bullish, Trump Media, and Semler Scientific.

One possible reason for this industry-wide crash is that the industry has become highly saturated, with the number of treasury companies rising. In most cases, the companies adding Bitcoin to their holdings are firms that have gone through a rough patch.

Falling mNAV ratio 

The other main reason why the Metaplanet share price has plunged this year is that its premium has continued to narrow such that the enterprise value dropped below its Bitcoin holding for the first time on Tuesday.

The mNAV has been in a strong downward trend after peaking at over 22 earlier this year. A falling premium is an important thing to Bitcoin treasury companies that depend on raising money to accumulate.

Ideally, the cost of capital when a company has a high premium is low compared to when the mNAV is falling. For example, MicroStrategy had a policy to never sell shares when the mMNAV was below 2.5 as that meant more dilution. It recently changed this policy as the NAV fell.

Continued dilution of investors 

Further, the Metaplanet share price has collapsed because of the ongoing dilution of shareholders as the company continues to raise cash to buy Bitcoin.

Metaplanet’s shareholders recently gave it an approval to raise cash through share sales and preferred shares. Raising cash through share sales leads to dilution. In Metaplanet’s case, the number of outstanding shares jumped to 654 million today from 114 million last year.

Raising cash through selling preferred shares involves selling a certain class of shares, with the holders receiving a dividend. The challenge is that raising this capital is not easy especially when the mNAV has plunged. This likely explains why Metaplanet has not bought any Bitcoins recently.

Metaplanet stock price has formed a death cross pattern 

The daily timeframe chart shows that the Metaplanet stock price has been in a strong freefall after peaking at ¥1,932 in June this year. It has continued to make a series of lower lows and lower highs in this period  

The stock has plunged below the important support level at ¥709, the highest swing in February this year. This week, it moved below the important support level at ¥500, which is both a psychological level and the lower side of a small double-bottom pattern whose neckline is at ¥665.

The stock has now formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) have crossed each other. A death cross is one of the most popular bearish continuation signs in technical analysis.

The Relative Strength Index (RSI) has continued falling and is nearing its oversold level. Therefore, the most likely scenario is where the stock continues plunging, with the next target level being at ¥297, the lowest level in April this year.

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