Investor concerns that Galaxy Digital (GLXY.TO) could suffer significant losses due to its exposure to Terra's LUNA token are "clearly unwarranted," BTIG Equity Research analyst Mark Palmer said in a note to clients Thursday.
Shares of Galaxy have plunged more than 40% this week and were down more than 20% on Wednesday. On Thursday, they fell 1.6% to $8.02.
In its latest management discussion and analysis for the quarter ended March 31, Galaxy said its largest contribution in the quarter to the $355 million in net realized gains from its digital assets came from the sale of LUNA. Galaxy had previously said in its fourth-quarter earnings release that it owned $407.6 million worth of LUNA as of Dec. 31.
"Our conclusion from GLXY's disclosures of its LUNA exposure is that the company appears to have sold all or most of its positions at a healthy profit during 1Q22, reflecting the token's strong appreciation in 2021," Palmer wrote.
Galaxy did not immediately respond to a request for comment.
Algorithmic stablecoin TerraUSD (UST) recently lost its 1:1 peg to the U.S. dollar, while Terra's own LUNA token continued its rapid decline this week.
BTIG reiterated a buy recommendation on Galaxy with a C$37 ($28) price target.
Galaxy said earlier this week that it has received approval from its board to repurchase up to 10% of its shares given current market conditions.