When a stock drops 60% in a month, analysts typically run for the hills. But Roth Capital's Darren Aftahi is doing the opposite with American Bitcoin Corp. (ABTC), initiating coverage with a buy rating and a $4 price target that suggests the battered stock could more than double from Wednesday's closing price.

The Case for Buying Into the Carnage

Aftahi's bullish call comes at an interesting time. The stock has been in freefall, dropping over 60% in the past month and nearly 20% just this week. Those are the kinds of numbers that make investors check their portfolios twice to make sure there wasn't a glitch.

According to the analyst's track record, he's been correct 47% of the time. So it's basically a coin flip, but with a 106% upside potential if he's right.

Here's where things get a bit interesting from a connections standpoint: Roth Capital happens to be the underwriter for Colombier Acquisition Corp. III, a special-purpose acquisition company that lists Donald Trump Jr. as a director. Meanwhile, American Bitcoin co-founder Eric Trump is dealing with his own decisions about the company.

The Lock-Up Expiration Drama

The recent collapse wasn't exactly a mystery. American Bitcoin's lock-up period for early investors expired, meaning people who got in early could finally sell their shares and pocket their gains. Eric Trump, who co-founded the company, publicly stated he's "100% committed" and won't be selling his stake. The market's response? A 38% plunge immediately after the lock-up ended.

It's the classic scenario where everyone says they're holding, but the stock price suggests otherwise.

American Bitcoin is majority-owned by Hut 8 Corp. (HUT) and completed its all-stock merger before beginning to trade on the Nasdaq in early September. The company isn't just mining Bitcoin for quick profits—it's building a strategic Bitcoin reserve. Currently, American Bitcoin holds 4,783 BTC, valued at roughly $432 million according to Bitcointreasuries.net.

Where Things Stand Now

At the time of the analysis, Bitcoin was trading at $90,056.83, down 2.80% over 24 hours. American Bitcoin shares closed Wednesday's regular session down 5.37% at $1.940, though they managed to tick up 1.55% in pre-market trading following the analyst upgrade.

Technical indicators weren't particularly encouraging, with the stock showing weaker price trends across short, medium, and long-term timeframes. For investors comparing Bitcoin treasury plays, Strategy Inc. (MSTR) remains the elephant in the room as the comparison point for companies stockpiling Bitcoin on their balance sheets.

Whether Aftahi's buy rating proves prescient or premature will depend on whether American Bitcoin can stabilize after the lock-up selling pressure subsides. At these prices, he's betting the selloff has gone too far. The market, for now, seems less convinced.