The cryptocurrency market has entered a period of intense volatility, with Bitcoin plunging to its lowest level in over a year and a half. Amid rising interest rates and macroeconomic uncertainty, the world's largest digital asset briefly dipped below $21,000 on June 14, reaching a low of $20,846—a single-day drop exceeding 16%. This marks the weakest performance since December 16, 2020, sending shockwaves through the broader crypto ecosystem and impacting blockchain-linked equities, particularly in the Hong Kong stock market.
As Bitcoin’s price tumbles, so does total market capitalization across the crypto sector, which has now fallen below the $1 trillion threshold. According to Wind data tracking global asset performance, Bitcoin ranks among the worst-performing assets year-to-date in 2025, with a staggering 53% decline.
The Downward Spiral: From $28,000 to $21,000 in Days
Just days before the crash, on June 13, Bitcoin was still trading above $28,000. However, a rapid sell-off—often referred to as a "crypto waterfall"—began unfolding early that morning. By midday, the price had broken below the critical $25,000 support level.
Although there was a brief rebound that temporarily restored some losses, the overall market sentiment remained bearish. With hundreds of altcoins also in freefall, Bitcoin failed to recover and continued its descent toward the $20,000 psychological floor. At the time of writing, it hovers around $21,000, having lost more than $7,000 in value within 24 hours.
This sharp correction reflects growing investor caution amid tightening monetary policy from central banks worldwide—particularly the U.S. Federal Reserve—leading to reduced risk appetite and capital outflows from speculative assets like cryptocurrencies.
Meitu’s Crypto Gamble Backfires: Market Cap Crushed by 96%
One of the most visible casualties of this downturn is Meitu Inc. (01357.HK), a once high-flying Chinese tech company known for its photo-editing apps. In recent years, Meitu made headlines for allocating substantial corporate funds into digital assets—primarily Bitcoin and Ethereum.
According to its latest annual report filed on April 28, Meitu held Bitcoin with a fair value of $45.1 million and Ethereum valued at $117.3 million at the time. While unrealized gains on Ethereum amounted to approximately 425.6 million RMB, the depreciation of Bitcoin led to an impairment loss of 28.5 million RMB—already recognized in its financial statements.
However, if Meitu has held onto its Bitcoin holdings since the report's disclosure date, the unrealized losses would now be significantly deeper—expanding by an estimated 44% due to the continued price decline.
At its peak following its Hong Kong IPO, Meitu’s market capitalization approached 100 billion HKD. Today, that figure has collapsed to just 4 billion HKD, representing a devastating 96% erosion in shareholder value.
While the company reported solid operational results for fiscal year 2021—recording total revenue of 1.666 billion RMB (up 39.5% year-on-year) and adjusted net profit of 851 million RMB (up 39.7%)—its aggressive crypto investment strategy has severely damaged investor confidence during prolonged bear markets.
Why Crypto Exposure Can Make or Break Tech Stocks
Meitu’s case illustrates a growing trend: publicly traded companies using balance sheet capital to invest in volatile digital assets. While such moves can amplify returns during bull runs, they also expose firms to extreme downside risks when markets reverse.
Investors are increasingly scrutinizing whether these investments align with core business operations or merely reflect speculative bets. For companies like Meitu, whose primary revenue stems from consumer software and advertising, large crypto holdings create a disconnect between fundamentals and valuation.
Moreover, accounting rules require impairments to be recognized when asset values drop significantly—and once written down, these losses cannot be reversed even if prices recover later. This creates asymmetric risk: limited upside potential but substantial downside exposure.
Key Factors Influencing Bitcoin’s Recent Decline
- Federal Reserve rate hikes reducing liquidity and increasing bond yields
- Risk-off investor behavior favoring safe-haven assets like gold and Treasuries
- Widespread deleveraging across crypto exchanges and leveraged trading platforms
- Loss of institutional confidence amid regulatory scrutiny and macro headwinds
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Frequently Asked Questions (FAQ)
Q: What caused Bitcoin to drop below $21,000?
A: A combination of macroeconomic factors—including aggressive U.S. Federal Reserve rate hikes, reduced market liquidity, and widespread risk aversion—triggered massive sell-offs across digital assets. Leverage unwinding on crypto exchanges further accelerated the decline.
Q: How much did Meitu lose from holding Bitcoin?
A: Based on its latest disclosures, Meitu has already recorded a $28.5 million RMB impairment loss on its Bitcoin holdings. If prices remain near $21,000, unrealized losses could increase by another 44%, significantly impacting its balance sheet.
Q: Is Bitcoin’s $1 trillion market cap a key support level?
A: Yes. Falling below $1 trillion signals extreme bearish sentiment and often triggers algorithmic trading patterns that deepen declines. Historically, reclaims above this level have preceded stabilization or recovery phases.
Q: Why did Meitu invest in cryptocurrency?
A: Meitu stated that its investments were part of a long-term treasury strategy aimed at diversifying cash reserves and embracing blockchain innovation. However, critics argue it introduced unnecessary risk unrelated to its core tech business.
Q: Can companies reverse crypto-related impairment losses?
A: No. Under current accounting standards (IFRS), once an impairment is recognized on digital assets, it cannot be reversed even if market prices rebound in the future—making write-downs permanent on financial statements.
Q: What does this mean for other blockchain-linked stocks?
A: Companies with direct crypto exposure—like mining firms or exchanges—typically see their stock prices correlate strongly with Bitcoin movements. Firms like OKX or Coinbase may experience short-term pressure but often recover faster during bull cycles due to higher trading volume upside.
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Looking Ahead: Lessons from the Downturn
The current downturn serves as a sobering reminder that digital assets remain highly speculative despite growing adoption. For corporations considering crypto investments, the Meitu case underscores the importance of risk management, transparency, and alignment with long-term strategic goals.
Meanwhile, retail investors should approach crypto-linked equities with caution—especially those whose valuations are driven more by sentiment than fundamentals. Monitoring on-chain metrics, macroeconomic indicators, and corporate disclosures can provide early warning signs before major corrections occur.
As volatility persists in 2025, resilience will come not from chasing price swings—but from informed decision-making grounded in research and disciplined strategy.