Reddit sold the majority of its cryptocurrency holding, mainly dominated by Bitcoin, before BTC started pumping up in October, as revealed in its latest Securities and Exchange Commission (SEC) filing.
The news comes as Bitcoin has experienced a significant price gain that cryptocurrency traders have coined the term ‘Uptober.’
In its SEC filing the company said: “During the three months ended September 30, 2024, we sold the majority of our cryptocurrency portfolio, which consisted primarily of Bitcoin and Ether.”
Reddit missed the windfall by a whisker
Reddit sold its Bitcoin at a price between $54,000 and $68,000 before it could cash in on a potential windfall as the cryptocurrency soared to $73,000.
Although Reddit did not disclose the amount of cryptocurrency that was disposed of, it maintained that the sale was immaterial.
“The net carrying value of our cryptocurrencies, as well as the gain recognized on sale, was immaterial for the periods presented.”
Reddit.
However the company said, the Bitcoin and Ether sold in the period to September 2024, were only in their portfolio in order to fulfill treasury purposes. Reddit added that the company needs board approval in order to execute any future cryptocurrency investments according to its investment policy.
“Any investments by us in cryptocurrencies for treasury purposes are limited to Bitcoin, Ether, and any other cryptocurrency that the SEC and other investment regulatory boards do not deem to be a security through a public statement,” Reddit said in its filing.
The company acknowledged that it is difficult to execute as they are risk-based judgments and not guided by regulatory developments.
According to Forbes, the Bitcoin-led cryptocurrency rally is the result of a combination of factors. Hedge fund investors have bet on Bitcoin as a safe haven against inflation, which is projected to be driven by government policies backed by presidential candidates Kamala Harris and Donald Trump.
Economists believe that the world will see the US debt soar by trillions of dollars and that the Federal Reserve which cut interest rates early will fail to tame inflation.
On the other hand, the price rally has coincided with the rising odds of a Trump presidency which despite his previous stance on the cryptocurrency has emerged to be pro-Bitcoin as he is advocating for a ‘strategic national Bitcoin stockpile’.
JUST IN: Reddit sold the majority of its #Bitcoin before BTC started pumping in October — SEC filing pic.twitter.com/JGRrdf2PMK
— Bitcoin Magazine (@BitcoinMagazine) October 30, 2024
Reddit shares rallied on strong Q3 earnings
On the New York Stock Exchange, Reddit shares gained by 41% on Wednesday to $116 per share after the company reported a $30 million net income for the third quarter.
The third quarter net income beat estimates and was coming from a $7.4 million loss in the same quarter in 2023.
The company expects Q4 revenue to reach between $385 million and $400 million, above the average analyst estimate of $357.9 million.
“It was another strong quarter for Reddit and our communities as we achieved important milestones, including new levels of user traffic, revenue growth, and profitability.”
Reddit CEO Steve Huffman.
The firm has quite a history with cryptocurrencies particularly Bitcoin and Ethereum, as it began with its plans to integrate blockchain technology within its platform.
Reddit introduced the Vault cryptocurrency wallet and collectible avatars which allowed users to own digital items on the Ethereum blockchain via Polygon (MATIC).
However, since these developments, the company has distanced itself from recent cryptocurrency initiatives such as the Moons token and Collectible Expressions, which were later abandoned.
In its SEC filing, the company said it has doubts about the long-term adoption of blockchain, noting cryptocurrency speculative risks. The Reddit app still carries the Vault wallet, and allows users to access crypto rewards, despite the firm reducing its crypto investments.
Reddit actions indicate a more cautious approach to blockchain, despite over 18 million tokens of their collectible avatars having been minted.
