ABTC

Why Did American Bitcoin Corp($ABTC) Director Buy 175K Shares Despite 80% Bitcoin Crash?

12/18/2025 11:12

American Bitcoin Corp ($ABTC) is drawing attention amid Bitcoin's sharp decline. On December 16, Director Richard Busch purchased 175,000 shares at $1.66 per share, marking the first significant insider buying signal since the company's major restructuring in September. American Bitcoin Corp is a nascent Bitcoin infrastructure company founded in March 2025, operating as a subsidiary of Hut 8 Corp. Based in Miami, the company provides institutional investors with cryptocurrency exposure through institutional-grade Bitcoin mining and systematic Bitcoin accumulation. Despite operating with just 2 employees as a lean operation, it leverages parent company Hut 8's mining expertise and resources. Busch's purchase is particularly noteworthy given current market conditions. With Bitcoin falling over 7% below $85,000 in early December, dampening year-end rally expectations, an insider's confident buying suggests potential value recognition. This contrasts with Anchorage Lending's sale of 2.53 million shares (approximately $20.19 million) on September 3, though that transaction was part of corporate restructuring involving a name change from Gryphon Digital Mining to American Bitcoin Corp and a 5-for-1 reverse stock split. Financially, the company shows remarkable growth. Q3 revenue reached $64.22 million, up 453% year-over-year, while EBITDA surged 481% to $22.41 million. Trailing twelve-month revenue stands at $122.5 million. However, beneath this growth lie concerning factors: the current ratio is just 0.07, indicating severe short-term liquidity constraints, and twelve-month operating cash flow remains negative at -$19.5 million. The stock price has plummeted nearly 80% from around $8 in September to $1.66 in December, reflecting Bitcoin's decline and broader cryptocurrency sector weakness. According to Morningstar's December outlook, small-cap stocks trade at a 15% discount to fair value, potentially offering valuation appeal for small crypto-related stocks like $ABTC. Roth Capital recently issued a Buy rating with a $4 price target, implying 140% upside potential from current levels. However, investors must carefully consider several key factors. First is Bitcoin price volatility. With the business model based on mining and Bitcoin accumulation, the company is extremely sensitive to Bitcoin price movements. While December's Fed rate cut expectations (85% probability) could benefit crypto markets, geopolitical uncertainties and regulatory risks persist. Second is the liquidity issue. A current ratio of 0.07 signals red flags for short-term solvency. Despite rapid growth, working capital management or short-term financing strategies may be necessary. Fortunately, the company filed for a $2.1 billion stock offering with the SEC in September, providing funding options. In an optimistic scenario, Bitcoin price recovery, Fed rate cuts, and increased institutional demand for crypto infrastructure could combine to create strong upward momentum. Busch's purchase likely reflects such expectations. Conversely, further Bitcoin decline or increased regulatory pressure could create greater difficulties given existing liquidity constraints. Particularly if cash flow improvement is delayed, additional fundraising pressure could emerge. In conclusion, $ABTC represents an investment with both high growth potential and substantial risks. While insider buying is a positive signal, careful monitoring of Bitcoin market trends and the company's liquidity improvement is necessary. It's worth considering for investors seeking crypto sector exposure while tolerating high volatility.