Meitu loses more than $43 million in crypto investments amid bear market
During the crypto bull run last year, Bitcoin hit the $50,000 mark for the first time, surpassing many expectations. As a result, more investors bought bitcoin at that time. Hong Kong Tech giant Meitu was one of the companies that bought bitcoin as a treasury.
As the market fell, the tech giant suffered impairment losses. This is a type of loss where the value of an asset falls below the investment’s book value.
Bitcoin has lost over 50% of its value in the second quarter of 2022, the worst quarterly performance of BTC since the third quarter of 2011. The decline in BTC value is devastatingly affecting many of the investors.
Meitu has lost almost half of the valuation of its crypto holdings in the rise of the bear market this year. However, the tech firm made headlines in April 2021 after buying around $100 million worth of crypto holdings.
Distribution of Meitus Crypto holdings
A local media revealed Meitu’s statement about the BTC holdings. According to the report, the firm lost more than 300 million yuan, worth approximately $43.4 billion, on crypto investments.
Recall that Meitu revealed its crypto holdings to be around 940 BTC and 31,000 ETH during an exchange filing in July. The respective purchase amounts for the tokens are $49.5 million and $50.5 million. This brought the company’s net crypto investment to $100 million.
However, the firm lost almost half of its investment value by the second quarter of 2022 due to the recent downturn in the crypto market. In addition, the financial filing revealed that the impairment loss more than doubled from the previous quarter, as Meitu had previously expected.
The company also said that the loss of the value of its crypto holdings would have more drastic effects on performance. As a result, it could lead to a net loss for the firm in its report for the second quarter of the year.
MicroStrategy, Tesla and others suffered losses
Besides Meitu, other prominent companies have experienced notable losses through crypto investments. For example, MicroStrategy, the leading public company investing in Bitcoin, has also reported a drop in value. The company reported over $900 million in losses on BTC holdings by the second quarter of 2022.
During the peak of last year’s bull run, Microstrategy, led by Michael Salor, used Bitcoin as a treasury. This move made Bitcoin popular against the US dollar. The idea became very attractive when Bitcoin climbed a brand new all-time high every month.
Companies like SpaceX, Telsa and dozens of others joined the trend. However, the bubbles have burst with the arrival of the bear market as the BTC price fell. As a result, Bitcoin fell off its peak and is now trading at a third of its previous peak value.
Featured image from Pixabay, chart from TradingView.com
