Original author: Liam Akiba Wright
Chopper, Foresight News
The treasury asset strategy of American Bitcoin presents a contradiction: the company’s Bitcoin reserves continue to grow, while its stock price consistently declines.
The company, closely tied to Eric Trump, recently disclosed that its Bitcoin holdings increased from over 7,000 BTC at the end of the first quarter to 8,000 BTC. Meanwhile, the company announced a 1-for-15 reverse stock split, consolidating every 15 existing shares into one new share. A reverse stock split only increases the per-share trading price and does not alter the company’s overall valuation; the total market value of investors’ holdings remains unchanged at the moment the split is completed.
The stock split took effect after market close on July 2, and the adjusted ticker symbol began trading on Nasdaq on July 6. On one side is a substantial reserve of 8,000 bitcoins; on the other, the market is no longer willing to assign the company a valuation. Even after the reverse split, the company’s valuation can only be stabilized if ongoing capital continues to recognize the growth in its per-share bitcoin reserve and the profitability logic of its mining operations. Conversely, if the market interprets this split as a signal of weak individual demand and an unsustainable corporate strategy, the stock’s valuation will become even harder to support.
Bitcoin reserves were meant to support the stock price, but reality has faced significant challenges.
American Bitcoin has accumulated a substantial portfolio of Bitcoin assets.
According to the company’s Q1 2026 financial filing with the U.S. SEC, its Bitcoin holdings increased from approximately 5,401 BTC at the end of 2025 to 7,021 BTC as of March 31. At the time, company co-founder and Chief Strategy Officer Eric Trump stated that the company actually held over 7,300 BTC, placing it among the top publicly listed companies by Bitcoin holdings.
The financial report disclosed that, in the first quarter, the company mined 817 bitcoins independently and acquired an additional 803 bitcoins over-the-counter. Despite a quarterly sequential decline in bitcoin prices of approximately 22%, the mining business maintained a gross margin above 50%, with the cost per mined bitcoin reduced to $36,200.
This business model is crucial: while most Bitcoin treasury companies rely solely on issuing additional shares to raise funds for purchasing Bitcoin, American Bitcoin leverages its mining operations to acquire Bitcoin at a cost below the current market spot price, allowing for additional position building when funds and market conditions permit.
However, this earnings report also revealed a problem: simply holding Bitcoin reserves is not enough to support stock performance.
In the first quarter, the company generated $62.1 million in mining revenue, incurred a net loss of $81.8 million, reported an adjusted EBITDA loss of $91.3 million, and recorded digital asset impairment losses totaling $117.2 million. Although the company continues to consistently mine and increase its Bitcoin holdings, investors will assess whether these incremental reserves justify the current stock valuation.
This milestone of 8,000 Bitcoin holdings reinforces the company's narrative around reserve assets, but it does not address the multiple headwinds facing the stock price.
American Bitcoin stated that the primary purpose of this reverse stock split is to increase the per-share price of Class A common stock to meet Nasdaq’s minimum listing price requirements. The Form 8-K filed on June 22 revealed that the shareholders initially approved a reverse split ratio ranging from 5:1 to 40:1; following the annual shareholders meeting, the board ultimately finalized a 15:1 split ratio.
The company's proxy statement also prelists multiple risks associated with this stock split:
- The stock price increase may not correspond to the extent of the reduction in total shares outstanding;
- Stock splits are unlikely to attract new investors and may be viewed negatively by the market;
- Individual stock liquidity may further decline, increasing trading costs for investors holding fractional shares.
These risks have significantly diminished the market appeal of the 8,000 BTC holding as a positive factor. Even if companies continue to increase their Bitcoin holdings, if investors determine that the company’s valuation should be lowered, the stock’s secondary market performance will remain weak.
For publicly traded companies holding Bitcoin as treasury assets, stock price is vital: a stable and strengthening stock price enables the company to raise capital at favorable valuations and continue acquiring Bitcoin using market funds.
The proxy statement also discloses a second key risk: after the reverse stock split, the company’s total authorized capital remains unchanged. While the total number of outstanding shares will decrease, the maximum number of shares the company can issue stays at its original level, leaving a large number of shares reserved for future issuance. The company states that these shares may be used for financing, acquisitions, and other corporate purposes, while warning that future issuances will significantly dilute the equity of existing shareholders.
Even if the company does not currently initiate a share issuance, the mere market expectation of a high probability of future equity financing will continue to suppress stock performance.
Stock valuation is the real test.
The key question in today’s market is whether buying this stock offers additional value compared to holding Bitcoin directly or choosing other simplified Bitcoin investment products.
The bullish rationale is that American Bitcoin continues to accumulate Bitcoin, the mining profit model remains stable, dilution from issuance is manageable, and market liquidity has been gradually recovering after the split. Under this scenario, this reverse split is merely a slightly awkward but resolvable episode within the broader long-term coin-holding strategy.
The bearish arguments are equally clear. If liquidity remains weak, the stock will continue to trade like a struggling small-cap company; or, if future fundraising offsets the benefits of reserve growth, the significance of the 8,000 BTC milestone will be greatly diminished.
Investors may acknowledge a company’s substantial Bitcoin reserves while simultaneously lowering the overall enterprise valuation. As of July 12, the spot price of Bitcoin was slightly below $64,000, down nearly 50% from its all-time high in October 2025, with risk appetite across the broader crypto market highly divergent. In this environment, the market will not automatically grant a valuation premium simply because a company has increased its Bitcoin holdings; the company must demonstrate that holding its stock delivers incremental value unattainable through direct Bitcoin purchases.
The core differentiating advantage of American Bitcoin is its ability to scale mining operations and accumulate Bitcoin at low cost; the primary pressure point is whether this model can continue adding positions without issuing new shares, thereby avoiding dilution of existing shareholders.
The next challenges are: first, whether trading volume and liquidity for the stock can stabilize; second, whether the company will release detailed documentation explaining how the 8,000 bitcoins are custodied and held; and third, whether future financing actions can increase bitcoin holdings per share, rather than simply relying on issuing more shares to buy assets.
This company also serves as a stress test for the entire crypto treasury sector. Political associations with Trump can attract market attention, and continuous Bitcoin accumulation can reinforce the treasury asset narrative—but they cannot solve the fundamental underlying issues. The fact that the company needs a reverse stock split just to maintain its exchange listing status reveals its weak fundamentals.
If the market continues to recognize the company’s reserve expansion logic, this stock split will be viewed as a short-term adjustment, allowing the company to potentially continue expanding its Bitcoin balance sheet; however, once buying pressure fades, the milestone of holding 8,000 BTC will be seen by the market as a turning point where Bitcoin reserves are significantly misaligned with the company’s stock price.