Bitcoin Surges Past $100,000! Meitu Holdings Cashes Out $80 Million in Crypto, Revealing its Investment Strategy

Bitcoin Surges Past $100,000! Meitu Holdings Cashes Out $80 Million in Crypto, Revealing its Investment StrategyOn December 5th, Bitcoin's price broke through the $100,000 mark, reaching a new all-time high. At the time of writing, one Bitcoin is trading at approximately $102,900

Bitcoin Surges Past $100,000! Meitu Holdings Cashes Out $80 Million in Crypto, Revealing its Investment Strategy

On December 5th, Bitcoin's price broke through the $100,000 mark, reaching a new all-time high. At the time of writing, one Bitcoin is trading at approximately $102,900. This landmark event triggered significant volatility in the cryptocurrency market, prompting some investors to liquidate their holdings. Meitu Holdings (01375.HK) is a notable example. On the evening of December 4th, Meitu announced the sale of all its cryptocurrency assets, including approximately 31,000 Ether and 940 Bitcoin, for a total cash consideration of approximately $180 million, generating a profit of around $79.63 million (approximately RMB 5.71 billion).

Meitu's liquidation marks a surprising end to its rollercoaster journey in cryptocurrency investment. The company's crypto investment history has been dramatic. Its initial foray into cryptocurrencies began in the first quarter of 2021. On March 5th, the company announced the purchase of 15,000 Ether and 379.12 Bitcoin at a total cost of approximately $40 million. Meitu subsequently increased its holdings, buying another 16,000 Ether and 386 Bitcoin on March 17th, also costing around $40 million, and a further 175.68 Bitcoin on April 8th for approximately $10 million. In total, Meitu invested roughly $100 million in cryptocurrencies.

However, Meitu's cryptocurrency investment wasn't smooth sailing. Due to the significant price fluctuations in the cryptocurrency market, the company recorded impairment losses in 2022 and 2023. According to announcements, as of December 31, 2022, the fair value of Meitu's Ether and Bitcoin holdings was approximately $37.3 million and $15.6 million respectively, a significant decrease from their purchase price, resulting in impairment losses of approximately RMB 86.6 million and RMB 198 million respectively. At that time, Meitu was significantly "underwater," facing substantial investment losses.

But in 2023, the cryptocurrency market rebounded, with prices rising significantly. The 2023 financial report shows that the fair value of Meitu's Ether and Bitcoin holdings was approximately $71.23 million and $39.91 million respectively, leading to a reversal of impairment losses of approximately RMB 270 million. In fact, it wasn't until February 2024 that Meitu's cryptocurrency holdings finally exceeded their original cost.

The RMB 5.7 billion profit from Meitu's complete cryptocurrency liquidation far surpasses its combined net profit for 2022 and 2023. Before 2022, Meitu had been in a state of continuous loss for several years. In 2022, its operating revenue was RMB 2.085 billion, with adjusted net profit at RMB 110 million; in 2023, operating revenue reached nearly RMB 2.7 billion, with adjusted net profit at RMB 370 million.

Meitu has a clear plan for this substantial profit: 80% of the net proceeds from the sale will be used to pay a special dividend, with the remaining portion allocated as general operating capital. This windfall will significantly improve Meitu's financial position and inject new vitality into its future development.

Meitu's initial decision to invest in cryptocurrencies stemmed from the strategic vision of its then-chairman, Cai Wensheng. In 2021, Cai publicly stated that Meitu would continue to invest in blockchain technology, and that the purchased Ether and Bitcoin would serve as a value reserve for the company's long-term blockchain strategy. He believed that Meitu, as the first Hong Kong-listed company to purchase Bitcoin and the first globally to use Ether as a currency value reserve, had a first-mover advantage.

Cai's interest in blockchain and digital currencies has long-standing roots. As early as January 23, 2018, Meitu released a blockchain solution white paper, planning to build a blockchain ecosystem based on AI technology and launch the Meitu Intelligent Pass (MIP). Cai shared his views on blockchain in his WeChat Moments: "Blockchain is the biggest bubble in human history, but because it's just beginning, we can only embrace the bubble; non-participation would be the biggest risk."

Meitu is not the only Hong Kong-listed company involved in cryptocurrency investment. Boyaa Interactive (00434.HK) has also attracted market attention due to its substantial Bitcoin holdings. As of November 12th, Boyaa Interactive held 2,641 Bitcoin at a total cost of approximately $142 million, with an average cost of about $54,000 per Bitcoin; it also held 15,445 Ether at a total cost of approximately $42.5781 million, with an average cost of about $2,756 per Ether.

Unlike Meitu's liquidation strategy, Boyaa Interactive did not sell its cryptocurrencies but instead "rebalanced" its portfolio. A November 29th announcement revealed that the company exchanged 14,200 Ether for approximately 515 Bitcoin. After the exchange, Boyaa Interactive held approximately 3,183 Bitcoin, with an average holding cost of about $57,700 per Bitcoin. Based on the latest prices, Boyaa Interactive's cryptocurrency holdings also show significant unrealized gains.

Meitu's cryptocurrency investment experience offers valuable lessons for other businesses. Precise timing and risk management are crucial in the volatile cryptocurrency market. While Meitu ultimately profited, this doesn't negate the inherent risks of cryptocurrency investment. Investors need to carefully assess market risks and develop sound investment strategies to achieve stable returns.

In conclusion, Meitu's liquidation of its cryptocurrency holdings and its substantial profit have injected new vitality into the company's development, bringing a successful conclusion to its involvement in this sector. However, its investment journey highlights the co-existence of risk and opportunity in the cryptocurrency market, urging investors to proceed with caution and make rational decisions. Boyaa Interactive's strategy demonstrates an alternative approach to market volatilityactively managing assets and risks to maximize investment returns. The future of the cryptocurrency market remains uncertain, and participants will face ongoing challenges.