Equillium's Cryptocurrency Gambit Triggers 21.7% Freefall: Is the Biotech Sector Next?

Summary
• Equillium (EQ) plunges 21.7% intraday, trading at $0.5558 vs. $0.71 prior close
• CEO Bruce Steel unveils cryptocurrency treasury strategy amid $11.5M cash reserves
• RSI hits 77.9 (overbought) while 200D MA at $0.6171 looms as critical resistance

Equillium’s 12.4% drop today reflects investor skepticism toward its abrupt pivot to cryptocurrency. The biotech firm’s new treasury strategy—aimed at diversification and liquidity—has collided with its cash-constrained reality, sparking fears of operational misallocation. As the stock slumps past its 52-week low of $0.27, the move raises questions about biotech sector resilience in the face of non-core financial experiments.

Cryptocurrency Treasury Strategy Sparks Investor Doubt
Equillium’s 21.7% intraday collapse stems from its unconventional decision to integrate cryptocurrency into treasury reserves. CEO Bruce Steel framed the move as a “strategic evaluation” to boost liquidity, but investors reacted with alarm. With only $11.5M in cash projected to last until Q4 2025, the shift risks diverting capital from its core pipeline, including aryl hydrocarbon receptor modulator EQ504. The Altman Z-Score of -14.61 and six insider sell transactions in 12 months further eroded confidence, as markets questioned the prudence of allocating limited resources to a volatile asset class.

Navigating the Volatility: ETF & Technical Playbook
• RSI (14): 77.90 (Overbought)
• MACD: 0.0369 (Bullish) vs. 0.0169 Signal Line
• 200D MA: $0.6171 (Above current price)
• Bollinger Bands: Upper at $0.5618 (Near current price), Middle at $0.3991

Equillium’s technical profile suggests a short-term bearish bias despite a long-term ranging pattern. The 200D MA at $0.6171 acts as a critical psychological barrier; a break below $0.5618 (Bollinger Upper Band) could accelerate the selloff. Aggressive traders might short the stock using a 5% downside scenario ($0.528) to estimate potential gains. Given the lack of options liquidity, focus on ETFs like XBI (Biotech Select Sector SPDR) for sector exposure. The 30D support level at $0.3152 remains a key watchpoint for long-term holders.

Backtest Equillium Stock Performance
The backtest of EQ's performance after a -22% intraday plunge shows mixed results. While the 3-day win rate is 49.17%, indicating a higher probability of a positive return in the short term, the 10-day win rate drops to 42.08% and the 30-day win rate is 43.75%, suggesting that longer-term returns are more volatile. The maximum return during the backtest period was 3.42%, which occurred on day 56, indicating that while EQ can recover from a significant drop, the recovery period may be prolonged.

Act Now: Short-Term Bearish, Long-Term Watchlisted
Equillium’s 21.7% plunge reflects immediate skepticism toward its cryptocurrency pivot, but the biotech sector—led by Amgen’s 0.54% gain—remains largely insulated. Traders should monitor the $0.5618 Bollinger Upper Band as a near-term inflection point; a break below could trigger a test of 52-week lows. For now, short-term bearish setups dominate, but long-term investors may find value near the 30D support at $0.3152 if the stock avoids further fundamental deterioration. Watch Amgen’s stability for sector-wide sentiment cues.