In a notable strategic pivot, Reddit has sold off a significant portion of its cryptocurrency assets, according to a recent filing with the U.S. Securities and Exchange Commission (SEC). The social media giant, which previously acquired Bitcoin and Ethereum as part of its treasury strategy, confirmed that these transactions occurred in the third quarter of 2024.
The filing indicates that the remaining cryptocurrency on Reddit’s balance sheet is now considered “immaterial,” reflecting a diminished interest in maintaining substantial holdings in digital currencies. This divestment aligns with Reddit’s preparations for an initial public offering (IPO), aimed at enhancing financial stability and concentrating its focus.
This decision to liquidate its digital assets seems particularly untimely, as Bitcoin has recently undergone a significant price rally, approaching its all-time high this October. Reddit executed its Bitcoin sales while prices fluctuated between $54,000 and $68,000, missing the opportunity to benefit from a rally that has seen Bitcoin near $73,000. This price surge, attributed to “Uptober”—a month traditionally associated with positive crypto performance—highlights the volatility and potential opportunity costs associated with corporate cryptocurrency holdings.
Reddit’s journey into the cryptocurrency space began with ambitious plans to integrate blockchain technology into its platform. This included launching the Vault cryptocurrency wallet and collectible avatars, which enabled users to possess digital items on the Ethereum blockchain via Polygon (MATIC).
However, the company has recently stepped back from several crypto-related projects, including the Moons token and Collectible Expressions, which have since been discontinued.
Despite reducing its cryptocurrency investments, Reddit’s stock saw a 41% increase on Wednesday, climbing to $116 per share. The company reported a net income of $30 million, surpassing analyst expectations and bouncing back from a $7.4 million loss recorded in the same quarter last year.
In its latest SEC filing, Reddit expressed concerns regarding the long-term viability of blockchain, citing the speculative risks associated with cryptocurrencies. Consequently, the company has implemented a new policy requiring board approval for any future crypto investments, which will be limited to assets that are “likely not securities” to sidestep regulatory complications.
While Reddit has scaled back its crypto investments, the app continues to offer the Vault wallet, providing users access to crypto rewards. The company’s Collectible Avatars project remains popular, with over 18 million tokens minted, but its recent moves suggest a more cautious approach to blockchain initiatives.
Related topics:
Bitcoin Maintains $67,000 Mark as Goatseus Maximus Soars 50%