The more BTC is hoarded, the weaker the stock price becomes.

Written by: Liam Akiba Wright

Translated by: Chopper, Foresight News

American Bitcoin's treasury asset strategy presents a contradiction: the company's Bitcoin reserves continue to grow, while the stock price weakens inversely.

This company, deeply tied to Eric Trump, recently disclosed that its Bitcoin holdings increased from over 7,000 coins at the end of Q1 to 8,000 coins. Meanwhile, the company announced a 1-for-15 reverse split, consolidating every 15 shares of existing stock into 1 new share. The reverse split can only raise the trading price per share, without changing the overall valuation of the company; the total market value of investor holdings will also remain unchanged at the moment the split is completed.

This split officially took effect after the market close on July 2, with the new stock code beginning trading on Nasdaq after adjustments on July 6. On one side, there is a massive reserve of 8,000 Bitcoins, and on the other, the market is no longer willing to pay for the company's valuation. Even after the reverse split, the company's valuation can only stabilize if there are continuing funds that recognize the company's increase in Bitcoin reserves and profitable mining logic. Conversely, if the market interprets this reverse split as a signal of weak demand for the individual stock and unsustainable corporate strategy, the stock price valuation will be even harder to sustain.

Bitcoin reserves should support stock prices, but reality faces many challenges

American Bitcoin has accumulated a substantial Bitcoin treasury asset.

According to the company's Q1 2026 financial report submitted to the U.S. SEC, the company's Bitcoin holdings grew from about 5,401 coins at the end of 2025 to 7,021 coins as of March 31. Co-founder and Chief Strategy Officer Eric Trump stated that the company actually holds over 7,300 Bitcoins, ranking among the top publicly listed Bitcoin holding companies worldwide.

The financial report simultaneously disclosed that the company mined 817 Bitcoins in Q1 and purchased an additional 803 coins outside of normal transactions. Even though the price of Bitcoin declined by about 22% quarter-on-quarter, the gross margin of the mining business remained above 50%, with the cost of mining each Bitcoin reduced to $36,200.

This operational model is important; most Bitcoin treasury companies rely solely on issuing new stock to raise funds to buy coins, while American Bitcoin is able to obtain Bitcoins at a lower cost than the market spot price through its mining operations, allowing for additional accumulation when funding and market conditions permit.

However, this financial report also revealed a problem: merely hoarding Bitcoin reserves is insufficient to support stock price performance.

In the first quarter, the company reported mining revenue of $62.1 million, a net loss of $81.8 million, an adjusted EBITDA loss of $91.3 million, and impairment losses related to digital assets of as high as $117.2 million. While the company can continue to produce and increase its Bitcoin holdings, investors will still evaluate whether these incremental reserves align with the current stock valuation.

This milestone of 8,000 Bitcoin holdings reinforces the narrative of the company's reserve assets but does not resolve the multiple downward pressures facing the stock price.

American Bitcoin stated that the core purpose of this reverse split is to raise the price per share of Class A common stock to meet Nasdaq's minimum listing price requirements. The 8-K filed on June 22 indicated that the shareholder meeting initially approved a reverse split proposal in the range of 5:1 to 40:1, and following the annual shareholder meeting, the board ultimately finalized a split ratio of 15:1.

The company’s proxy statement also outlines several potential risks associated with this reverse split:

• The increase in stock price may not necessarily match the reduction in total share capital;
• The split may struggle to attract new investors and could face negative interpretations from the market;
• The liquidity of the individual stock may further shrink, and the trading costs for investors holding fractional shares could rise.

These risks significantly diminish the market's attraction for the positive aspect of an 8,000 BTC holding. Even if the company continues to increase its Bitcoin holdings, once investors determine that the company's valuation should be adjusted downward, the stock market performance will still likely weaken.

For publicly traded companies holding Bitcoin treasury assets, stock prices are a lifeline: only with stable and strengthening stock prices can companies raise funds at desirable prices, using market funds to continue increasing their Bitcoin holdings.

The proxy statement also disclosed a second key risk: after the reverse split, the company's authorized total share capital remains unchanged. Although the total circulation of shares will decrease, the upper limit of shares the company can issue remains the same, reserving a large number of shares for future emissions. The company stated that these shares could be used for financing, acquisitions, and other business needs, while also warning that future issuances will significantly dilute existing shareholders' interests.

Even if the company does not initiate capital increases at this moment, simply the market’s expectation of "high probability of future equity financing" will continue to suppress stock price performance.

Stock price valuation is the true test

The core question in the current market is whether purchasing this stock, compared to directly holding Bitcoin or choosing other simplified Bitcoin investment products, can yield additional value.

On this, the bullish argument is that American Bitcoin continues to increase its Bitcoin holdings, the mining profit model is stable, and the dilution from capital increases is controllable, with market liquidity gradually recovering after the split. In this scenario, this reverse split could be seen as a slightly awkward yet resolvable episode in the long-term strategy of hoarding coins.

The bearish reasons are equally evident. If liquidity continues to weaken, this stock will continue to trade like a troubled small-cap company; or, if future financing offsets the benefits brought by reserve growth, then the significance of the 8,000 Bitcoins milestone will be greatly reduced.

Investors may acknowledge the company's substantial Bitcoin reserves, but simultaneously adjust the overall valuation of the enterprise downward. As of July 12, the spot price of Bitcoin was slightly below $64,000, down nearly 50% from its historical peak in October 2025, with the entire crypto market showing significant differentiation in risk preference. In such an environment, the market will not automatically grant valuation premiums simply because the company has increased its Bitcoin holdings; the company must prove that holding its stock provides incremental value that cannot be obtained from directly buying coins.

American Bitcoin's core differential advantage lies in its ability to scale its mining operations and hoard coins at low costs; the central pressure point, however, is whether this model can continue to accumulate without relying on issuing new shares, avoiding dilution of existing shareholders.

The upcoming tests are: first, whether the trading volume and liquidity of the individual stock can stabilize; second, whether the company will issue detailed documents explaining the custody and holding methods for the 8,000 Bitcoins; and third, whether subsequent financing actions can enhance the per-share Bitcoin holdings, rather than simply buying assets with newly issued funds.

This company also serves as a stress test sample for the entire crypto treasury sector. The political labels related to Trump may attract market attention, and the continued increase in Bitcoin can reinforce the treasury asset narrative, but it does not solve the core underlying issues. The fact that the company needs to rely on a reverse split to maintain its listing qualifications reveals inherent weaknesses in its fundamentals.

If funding continues to endorse the logic of the company's reserve expansion, the market may view this reverse split as a temporary pain, with the potential for the company to continue to expand its Bitcoin asset balance sheet; once market buying fades, the milestone of 8,000 BTC holdings will be regarded as a turning point of "severe divergence between Bitcoin reserves and the company's stock price."