Retail investors have incurred losses estimated at around $17 billion from their investments in digital asset management companies such as “Strategic” and “Metaplanet.”
According to a study conducted by “10X Research” and published on Friday, these losses resulted from inflated stock prices, allowing these companies to sell their shares at prices significantly higher than the true value of their cryptocurrency holdings.
The prices of these stocks have now plummeted, leaving a large number of individual investors at a loss. The researchers stated in their report, “The era of financial magic for Bitcoin management companies has come to an end.”
The report, titled “After the Magic: How Bitcoin Management Companies Should Evolve Beyond the Illusions of Net Asset Value,” indicated that retail investors have effectively lost about $17 billion, while new shareholders overpaid by approximately $20 billion for their investments.
The researchers clarified that “Strategic” shares are now trading at a price 1.4 times higher than the value of their Bitcoin holdings, a significant drop from the premiums that used to reach three or four times in the past.
These companies focused on a simple strategy of selling shares at a premium over their net asset value, using the difference to buy more Bitcoin, then repurchasing and repeating the process.
The researchers also noted that the market capitalization of “Metaplanet” rose from $1 billion to $8 billion before dropping to $3.1 billion, while retaining $3.3 billion in Bitcoin.
They concluded: “In this process, shareholders lost $4.9 billion, while the company managed to accumulate $2.3 billion in Bitcoin, an achievement worthy of praise.”
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