On Tuesday, American Bitcoin Corp (ABTC) experienced a massive market downturn, with shares plunging over 50% to close at $1.75. This sharp decline occurred despite Bitcoin’s rally above $91,000, marking one of the most critical trading days for this crypto mining company since its debut on Nasdaq.
Why the Sudden Crash?
The dramatic price drop can largely be attributed to the expiration of pre-merger investor lockups. These early investors were able to sell their shares, leading to a massive selloff as trading activity surged to 55 million shares, significantly outpacing the average daily volume of 3 million shares.
ABTC went public in September through a reverse merger with Gryphon Digital Mining, and its stock hit a peak of $9.31 soon after listing. As of Tuesday’s close, the stock had lost a staggering 78% from that high.
Eric Trump Responds
Eric Trump, who heads American Bitcoin Corp, addressed the selloff directly. He explained that the lockup expiration was the primary reason behind the volatility, as permitted shareholders sought to take profits. However, he reaffirmed his commitment to the company, stating, “I’m holding all my ABTC shares. I’m 100% committed to leading the industry.”
Interestingly, limitations remain for many major shareholders. According to SEC filings, various stockholders still face a 180-day restriction preventing sale until March 2026, with some agreements stretching until September 2026.
Company Fundamentals
Despite the tumultuous trading day, American Bitcoin Corp’s fundamentals appear strong. The company swung to profitability in Q3, generating a net income of $3.47 million on revenue of $64.2 million. ABTC also boasts a 56% gross margin, with mining costs at 50% of Bitcoin’s spot price. Additionally, the company added 3,000 Bitcoin to its treasury during the quarter, resulting in total holdings exceeding 4,000 BTC.
Impact on Hut 8
The selloff had a ripple effect, impacting Hut 8 (HUT), which owns an 80% stake in American Bitcoin Corp. Hut 8 shares dropped 12% on the same day, breaking a steady rally that had tripled its stock price over the last six months. This decline highlights the interconnected nature of crypto-related stocks.
What Investors Need to Know
The stark contrast between Bitcoin’s surge and ABTC’s decline shows the challenges faced by crypto-related companies. While the industry holds strong profit margins, investor sentiment can be volatile, especially during key events like lockup expirations.
If you’re an investor in cryptocurrency or blockchain companies, consider diversifying into proven tools or technologies that offer portfolio growth and stability. For instance, exploring innovative blockchain wallets or Cold Storage USB devices like the Ledger Nano X can help secure your crypto assets while staying aligned with the evolving market.
Conclusion
American Bitcoin’s journey since its public debut illustrates how volatile the cryptocurrency landscape can be. As investors make sense of ABTC’s sharp decline, the underlying fundamentals of the company hint at long-term potential. Keep an eye on regulatory developments and market dynamics to navigate the crypto sector effectively.
