Fashion Giant Mogu Experiences Stock Surge After Announcing Purchase of Bitcoin, Ethereum, and Solana
Mogu, the China-based fashion company listed on Nasdaq, has joined the ranks of publicly traded companies investing in cryptocurrencies. The company's board of directors has approved a plan to spend $20 million on cryptocurrencies and related securities, marking a bold move towards diversifying their treasury holdings.
The decision to invest in Bitcoin, Ethereum, and Solana comes at a time when the market for digital assets is experiencing mixed sentiments. JP Morgan analysts have stated that share prices of crypto treasuries have "come under pressure," but companies adopting a crypto treasury plan have seen short-term stock price gains, sometimes with massive spikes.
In a similar move, Strategy, previously MicroStrategy, shifted from software development to buying Bitcoin in 2020, becoming the largest corporate holder of Bitcoin with 638,460 BTC worth over $73 billion. However, the S&P Dow Jones Indices last week excluded Strategy from its S&P 500 index, a move that is considered negative for other crypto treasuries due to overcrowdedness and investor fatigue.
Mogu, which went public in 2018 with Chinese tech conglomerate Tencent Holdings as an investor, has seen its share price largely stuck below $5 since reaching an all-time high above $37 in early 2021. The company's shares soared by 76% on Thursday, trading at $4.40, following the announcement of its crypto investment plan.
The board of Mogu believes that integrating digital assets into its core assets can diversify not only its treasury holdings but also its operational capabilities for next-generation AI products and services. However, the company did not provide further details about the specific crypto-related securities it plans to invest in.
It is worth noting that Mogu's investment in cryptocurrencies does not necessarily indicate a bullish sentiment on the price of Bitcoin, Ethereum, and Solana. The prices of these digital coins were not mentioned in the article.
Solana, the sixth biggest digital coin by market cap, is known for its crypto network that is used to build applications, similar to Ethereum's. Bitcoin and Ethereum, the two largest and oldest cryptocurrencies, continue to dominate the crypto market, despite the recent market fluctuations.
As more companies explore the potential of cryptocurrencies as a way to diversify their cash holdings, the crypto market is expected to see more institutional investments, potentially driving the growth and maturity of this nascent industry.
