Crypto Stocks Plunge as PIPE Gravity Takes Hold

Crypto treasuries backed by private investment in public equity (PIPE) deals face mounting pressure, with stock prices at risk of plummeting by up to 50% as selling overhangs intensify. Analytics firm CryptoQuant highlighted in a recent report that companies leveraging PIPEs to raise capital have seen share prices gravitate toward their issuance levels, driven by heavy sell-offs after lock-up periods expire. The phenomenon, dubbed "PIPE price gravity," has already eroded gains for firms like Kindly MD (NAKA), Strive Inc. (ASST), and Cantor Equity Partners (CEP), with some stocks collapsing by over 90% from peak levels.

The mechanics of PIPE deals—allowing private investors to purchase shares at a discount to market price—create structural headwinds for treasury stocks. When lock-ups lapse, investors often offload shares to lock in profits, increasing supply and depressing prices. For instance, Kindly MD’s stock surged to $35 in May 2025 after a PIPE announcement but plummeted 97% to $1.16, nearly aligning with its $1.12 PIPE price. Similarly, Strive Inc. (ASST) has lost 78% of its value since its $13 peak, while Cantor Equity Partners (CEP) faces a potential 50% decline from current levels.

The sell-off trend extends beyond individual firms. Data from Bitbo reveals that 23 out of 43 publicly traded companies that adopted Bitcoin as a treasury asset in 2025 have lost over 50% of their market value, with a median drawdown of -52.4%. The disconnect between crypto holdings and equity valuations has deepened, as firms now trade at discounts to the worth of their digital assets. For example, ETHZilla (formerly 180 Life Sciences) secured $80 million in debt to fund a $250 million buyback despite its stock falling 76% since August. Such measures, critics argue, signal financial distress rather than strategic resilience.

The broader crypto treasury model is under scrutiny as market saturation and regulatory uncertainty amplify risks. Over 100 companies have rebranded or pivoted to crypto holdings this year, but many lack differentiation or sustainable business models. The pace of Bitcoin accumulation by treasury firms has slowed sharply, with purchases dropping from 66,000 BTC in June to 14,800 BTC in August. Analysts warn that the reliance on debt-funded buybacks and speculative financing tools—such as Bitcoin-linked bonds—exposes firms to heightened volatility and liquidity challenges.

Market participants are increasingly skeptical about the viability of the crypto treasury strategy. Nasdaq has reportedly imposed stricter rules requiring shareholder approval for new share issuances by token-holding companies. Meanwhile, investors question the rationale for holding crypto through equity vehicles rather than direct exposure or ETFs, as exemplified by the struggles of even high-profile firms like MicroStrategy, which now trades below its Bitcoin acquisition cost. Without a sustained Bitcoin rally to offset losses, the sector faces prolonged downward pressure, with many stocks likely to trend toward or below their PIPE issuance prices.