Crypto treasury firms such as Kindly MD, Strive Inc., and Cantor Equity Partners face potential 50% losses as PIPE shares become tradable, impacting Bitcoin-backed equities.

The expiration of PIPE lock-ups introduces significant equity risk, potentially affecting Bitcoin markets indirectly through treasury liquidations, as evidenced by current market trends and public analysis.

Crypto Treasuries Face 50% Decline from PIPE Pressure

Crypto treasury firms confront up to 50% downside as PIPE lock-ups expire.

PIPE Expirations Threaten 50% Drop for Treasury Firms

Cryptocurrency treasury companies are encountering potential 50–55% downside due to the expiration of PIPE (Private Investment in Public Equity) lock-ups, resulting in impending selling pressure.

The PIPE deals primarily affect publicly traded treasury firms, including Kindly MD, Strive Inc., and Cantor Equity Partners, with Bitcoin as their main treasury asset. As PIPE shares become tradable, a potential market overhang looms. CryptoQuant’s market analysis highlights these concerns.

Dilution Risk: PIPE Impact on Stock Values

The release of PIPE shares is set to dilute existing shareholders’ value, potentially reducing stock prices significantly. The financial impact may prompt affected firms to reconsider their capital management strategies.

CryptoQuant’s analysis highlights how dilution and market overhang could impact equity valuations. Past data suggest lower on-exchange BTC values, indicating a return to PIPE baseline prices absent market recovery.

Traditional Market Lessons for Crypto Treasuries

Historical parallels exist in traditional markets, where equity overhangs due to PIPE releases led to significant stock price declines. Such occurrences in crypto-treasury entities are less common but notable.

“The PIPE increases the amount of shares in circulation, diluting existing shareholders. When PIPE investors are able to sell, the resale of these new shares creates an ‘overhang’ that pressures the stock price.” – Ki Young Ju, CEO, CryptoQuant

Expert insights from CryptoQuant suggest that a sustained Bitcoin rally might mitigate further depreciation, aligning current trends with established traditional equity market practices. Without a rally, many stocks could trend toward their PIPE prices.

Disclaimer: This website provides information only and is not financial advice. Cryptocurrency investments are risky. We do not guarantee accuracy and are not liable for losses. Conduct your own research before investing.