Bitcoin treasury firms that raised capital through private investment in public equity (PIPE) deals are facing increasing scrutiny as stock prices tumble amid early investor exits. According to a new report from CryptoQuant, several companies have seen drawdowns of 42% to 97%, driven largely by anticipated or actual PIPE unlocks.
PIPE agreements allow investors to purchase shares at discounted prices, typically before a public listing or major event, and then sell when restrictions are lifted. While this method provides quick capital, it often exposes companies to aggressive profit-taking by short-term holders. The moment these shares become tradable, markets often react violently.
PIPE Dumping Echoes Across Bitcoin Treasury Sector
The clearest example of this pattern is Nakamoto Corporation (NAKA). After raising funds via PIPE at $1.12 per share, NAKA’s stock skyrocketed to $34.77 in late May, buoyed by a rising Bitcoin market and investor enthusiasm for treasury-heavy crypto firms. But once PIPE shares unlocked, the stock crashed over 50% in one day, reaching $1.16 on September 15, a 96% collapse from its peak.
In a recently published report CryptoQuant warns that other PIPE-funded firms may follow a similar path. Strive (ASST), currently trading at $3, still sits above its PIPE price of $1.35, leaving a possible 55% downside when its own PIPE unlocks next month. CEP is also flagged for risk, trading nearly 2x above its PIPE level.
Meanwhile, Empery Digital (EMPD) is already below its PIPE price, and Sequans Communications (SQNS) is hovering just above it. According to the report, unless Bitcoin posts a sustained rally, many of these stocks are likely to trend toward, or below, their PIPE issuance levels.
As these mechanisms become more common in the crypto market, the NAKA episode may serve as a cautionary tale for retail investors seduced by high valuations without understanding the mechanics behind early-stage liquidity events.
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