PIPE-Fuelled Crypto Treasuries Face 50% Downside: Report

Crypto treasury companies that engage in private investment in public equity (PIPE) deals may face significant downside risks, with potential drops of up to 50% in their share prices, according to CryptoQuant. These companies, which utilize PIPE deals to rapidly raise funds, often see their stock performance negatively impacted due to an increase in shares available for sale. When PIPE investors sell their shares, it creates an oversupply that can depress stock prices. CryptoQuant's analysis of various crypto treasury firms found that many have experienced stock declines, with prices slumping towards their PIPE issuance levels. For example, the shares of both Kindly MD and Strive Inc. have plummeted significantly post-PIPE announcements. Without an increase in Bitcoin prices to counteract these trends, many crypto treasuries are likely to continue declining, trending toward or below their PIPE prices, leading to further selling pressure.

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