How Are Shares of Bitcoin Treasury Companies Performing Amid Private Fundraises? (CryptoQuant)

As Bitcoin adoption grows, more companies seek additional methods of raising funds to acquire the leading digital asset. Most have turned to Private Investment in Public Equity (PIPE) programs; however, these moves have backfired on their shares.

A report from the market analysis platform CryptoQuant revealed that the shares of most Bitcoin treasury entities that raised capital through PIPE programs have plummeted significantly. Worse still, others face the risk of further decline.

BTC Firms Turn to Private Fundraises

In PIPE offerings, publicly traded companies sell newly issued shares to a group of institutional or accredited investors. These programs are separate from their public offerings. They are characterized by features such as faster financing for the company and shares at a lower-than-market price for investors. PIPE investors also have the option to sell their shares after filing a resale registration.

Companies often offer PIPEs to quickly raise capital for buying BTC during bullish market conditions. Unlike public offerings and traditional financing methods, PIPEs are flexible and usually signal strategic intent to investors.

“Several Bitcoin Treasury Companies have opted to fund their Bitcoin purchases using a PIPE. Bitcoin Treasury Companies often need large blocks of capital quickly to front-run expected BTC rallies, announce large BTC purchases to rebrand their equity narrative or start their treasury strategy, and to continue to expand their total Bitcoin holdings,” CryptoQuant stated.

Although one of the few viable options for Bitcoin treasury firms, PIPEs can negatively impact a company’s stock performance. The offerings usually increase the number of shares in circulation, thereby diluting existing shareholders. In situations like these, selling pressure from PIPE investors creates a supply overhang that pulls down the stock price.

PIPE Shares Fall 97%

The share prices of most Bitcoin treasury companies that raised capital through PIPE have fallen toward their PIPE issuance levels. The declines range from 42% to 97%. Stocks still trading above their PIPE offering prices face declines of up to 50%.

Companies like Kindly MD (NAKA) have watched their stock plummet by 97% after their PIPE raise. NAKA declined over 50% in a single day after PIPE shares were unlocked for trading. Others, such as Empery Digital (EMPD) and Sequans Communications (SQNS), are already trading below their PIPE issuance price.

Additionally, entities like Strive (ASST) and Cantor Equity Partners (CEP) face downside risk, with their shares trading above their PIPE prices. They could still fall at least 50% before hitting the PIPE issuance levels.

CryptoQuant says only a sustained BTC rally will prevent the continuation of this trend.