Digital asset investment management firm NYDIG is warning that “a bumpy ride may be ahead” for many crypto treasury companies.
Greg Cipolaro, the global head of research at NYDIG, says in a new analysis that the market conditions of many crypto treasury companies may “deteriorate before they improve” due to share unlocks and narrowing premiums between share prices and the underlying net asset values.
-->Digital asset treasury companies are publicly-traded companies with a strategy to hold Bitcoin (BTC) or other crypto assets on their balance sheets.
“A number of Bitcoin-focused DATs (Digital Asset Treasury companies) still have outstanding mergers or incomplete equity and debt financings. Completing these steps is often a necessary requisite for registering shares, which in turn allows unrestricted public trading of the shares. In many cases, over 95 of the new outstanding shares are tied to these transactions, raising the prospect of a substantial wave of selling once registrations are effective.”
NYDIG also says that the share prices at time of fundraising are lower than the current share values of multiple Bitcoin treasury companies, indicating there may be sell pressure once the shares become tradable without restrictions.
“Complicating matters is the fact that the share prices of these DATs are trading at or even below the price of recent fundraises. Twenty One (CEP) shares are trading below their $21 PIPE (Private Investment in Public Equity) from June (but above their $10 PIPE in April), Nakamoto (NAKA) is trading below their $5 additional PIPE (but above its $1.12 PIPE). ProCap/Columbus Capital (CEP) is trading just above its SPAC (Special Purpose Acquisition Company) and preferred equity raise price and Bitcoin Standard Treasury Co/Cantor Equity Partners (CEPO) is trading just above the price of its equity PIPE. We could easily see shares slip below these key price levels, which might exacerbate selling once shares are freely tradeable.”
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