Why Trump-Backed Mining Company Struggles Despite Bitcoin’s Recovery

Shares of American Bitcoin Corp., the mining company tied to the family of US President Donald Trump, experienced a sharp decline on Tuesday, despite a broader recovery in the cryptocurrency market. 

The company faces continued challenges following a significant decrease in stock value over recent months.

American Bitcoin Corp. Faces Losses

As crypto markets rejoiced amid Bitcoin’s recent price recovery, American Bitcoin Corp. continued to see its shares slide. 

Google Finance reports that the Bitcoin mining company’s stock has dropped 37% in the last 24 hours, priced at $2.22 at the time of writing. Over the past six months, this decline has reached almost 60%.

The mining venture’s poor performance recently isn’t good news for the Trump family. The creation of American Bitcoin Corp. occurred a couple of months after Trump assumed office, as a spin-off from Hut 8 Corp.

Under the arrangement, Hut 8 supplied the majority of the mining infrastructure and retained an 80% stake in the project. At the same time, American Bitcoin Corp. became the platform through which Trump’s sons, Eric and Donald Trump Jr., control approximately 20%.

As a result, the mining company’s poor stock performance is directly tied to its profitability, affecting the Trump family’s financial interests.

What is striking about today’s events is that, despite Bitcoin’s price rebound, the company’s shares saw the opposite effect, continuing their decline.

Bitcoin’s Struggles Continue Despite Price Recovery

Bitcoin’s price has performed poorly over the past two months. Since peaking at $126,000 in October, its price has sharply declined. Less than two weeks ago, it fell to $82,800, the lowest since April.

Bitcoin regained its $90,000 level on Tuesday, improving market sentiment. However, this shift wasn’t enough to lift the stock price of Bitcoin-based companies like American Bitcoin Corp.

The inverted reaction suggests that a short-term price recovery alone may not suffice to improve the company’s performance. Given the broader context of the crypto industry, this conclusion is not surprising.

The uncertainty is compounded by MicroStrategy’s potential decision to sell its Bitcoin holdings if its stock remains below the value of its Bitcoin reserves. This could erode confidence in the asset.

Ethereum has underperformed more than Bitcoin, further indicating market weaknesses.

Key economic factors also fuel the volatility. The Federal Reserve’s stance on interest rates and the Bank of Japan’s monetary policy have particularly added further uncertainty.