CryptoQuant has warned that crypto treasury companies that turned to private investment in public equity (PIPE) financing could face share declines as investor lock-up periods come to an end.
Their review showed that many of these firms already saw prices sink toward the levels at which PIPE shares were issued.
PIPE financing allows private backers to buy new stock at a discount to the market rate. For companies in need of quick cash, it can be a convenient option, especially in a crowded industry.
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However, while it provides immediate funds, it also increases the number of shares in circulation. When investors sell these shares, the extra supply can reduce value for existing holders and pull prices lower.
The report highlighted several examples. Kindly MD, a healthcare company that shifted into Bitcoin
$109,755.64
treasury holdings, saw its stock collapse by more than 50% after PIPE shares were released for trading.
Strive also illustrates the risk: its PIPE deal was priced at $1.35, which points to a possible 55% decline from current levels once investors gain the ability to sell next month.
Another case is Cantor Equity Partners, a blank-check company merging with Twenty One Capital. Its PIPE price was set at $10, and while the stock has already dropped from its peak, CryptoQuant estimates that it could still lose about half its current value if it falls back toward the PIPE level.
Meanwhile, Next Technology Holding recently announced plans to raise up to $500 million. How does the company plan to achieve this? Read the full story.
