Meitu issued a warning to investors regarding its losses that may increase by 154% in the first half of this year after it had invested in cryptocurrencies, which had disastrous two months of recession worries.
Bitcoin's cost fell by more than 52%. Its value has fallen by about 70% from its all-time high in November.
Owner of Chinese selfie App, Meitu, Issues Warning After Values of Ether and Bitcoin Fell
Meitu, the owner of the Chinese selfie app, forewarned investors that because it entered into cryptocurrencies, which had a catastrophe over the previous two months on worries about recession, its losses might increase by as much as 154% in the first half of this year.
Listed in Hong Kong According to an exchange filing on Sunday, Meitu, whose applications let users edit their photographs, anticipates a loss of between 274.9 million (US$41.1 million) and 349.9 million yuan for the six months ending June 30, 2022. At the same time the previous year, the net loss was 137.7 million yuan.
According to the corporation, since March of last year, it has spent nearly US$100 million to purchase 31,000 ethers, and 940.89 bitcoins, whose values have subsequently declined to around US$32 million and US$18 million, respectively, based on their market value on June 30.
Popular tokens like ether and bitcoin once saw their prices drop by more than half when the cryptocurrency market underwent a shakeout. A sell-off in cryptocurrencies is being fueled by steep hikes in interest rates in the U.S. and other major nations.
Meitu fell 10.6% on Monday (June 27), trading at 93 H.K. cents (0.12 USD). Over the last year, the stock price has dropped more than 90%, wiping out HK$3.1 billion (US$395 million) in market value.
The company had high hopes when it first invested in cryptocurrencies last year, claiming that they "have ample room for appreciation in value" and that bitcoin could be a substitute store of value that could be superior to gold, precious stones, and real estate. The company's current difficulties stand in stark contrast to those high hopes.
Meitu said on Sunday that despite the setback, it continues to believe that there is "ample potential to grow" in accepting cryptocurrencies as the blockchain sector expands quickly. It also said that the price fluctuation was just transitory.
Meitu said that losses from cryptocurrencies would not significantly affect its cash flow, operations, adjusted net loss, or profits attributable to owners in the interim report. If the bitcoin market rebounds, it stated that these might be changed in the full-year report.
Bitcoin Fell More than 52% this Year
According to Coindesk, the price of one bitcoin dropped more than 52 percent this year and now circling at about $21,000. Since reaching an all-time high of nearly $69,000 in November, Bitcoin's value has decreased by almost 70%.
The global market value of assets has fallen to less than $1 trillion from its high of $3 trillion in November 2021, indicating that the entire cryptocurrency industry is experiencing similar hardship. The asset class's value has dipped below $1 trillion for the first time since 2021.
On June 18, the price of one bitcoin sank to as low as $17,592.78, breaking the $20,000 barrier for the first time since December 2020. In the most recent collapse of the cryptocurrency market, it has lost about 60% of its value this year and 37% only this month.
Its decline came after issues at numerous essential participants in the sector. Market participants warned that further dips might have a domino effect as other cryptocurrency investors are compelled to sell their holdings to fulfill margin requirements and cover losses.
After falling below its symbolic milestone of $1,000 over the weekend, the No. 2 cryptocurrency ether was trading at $1,0752. The decrease in the cryptocurrency markets came at the same time as a decline in the stock market, with U.S. stocks seeing their worst weekly percentage loss in two years due to concerns about rising interest rates and the increasing probability of a recession.
The movements of Bitcoin tend to resemble those of other risky assets like tech stocks. According to Coinmarketcap, the total market value of cryptocurrencies is about $877 billion, down from a record of $2.9 trillion in November 2021.
