Bitcoin’s Hidden Risk — How DAT Stock Meltdown Could Trigger Forced Selling Crisis

Bitcoin faces a hidden threat that could send shockwaves through crypto markets.

The Domino Effect

When institutional holdings like DAT stock collapse, it creates a chain reaction. Funds facing margin calls liquidate their most liquid assets first—and Bitcoin often tops that list. This forced selling pressure hits precisely when markets can least afford it.

Liquidity Crunch

Traditional finance meltdowns don't stay contained. They bleed into digital assets as portfolio managers scramble for cash. The very institutions that championed Bitcoin's legitimacy become its biggest sellers during crises—because when Wall Street panics, diversification promises get abandoned faster than a sinking ship.

Market Reality Check

This isn't theoretical. We've seen this movie before during previous stock routs. The correlation between traditional market stress and crypto sell-offs remains Bitcoin's Achilles' heel. Yet another reminder that when traditional finance catches a cold, cryptocurrency still gets pneumonia—despite all the decentralization talk.

What Is a PIPE?

CryptoQuant’s report focuses on Bitcoin holding companies that have raised capital through Private Investment in Public Equity (PIPE) programs. The firm’s analysis of these companies’ stock performance found a significant downtrend.

A PIPE is a private offering where a public company sells newly issued shares (or convertible securities) to a select group of accredited or institutional investors. This method allows a company to raise capital quickly by selling shares at a discount to the market price.

Many bitcoin DAT companies raised capital this year. The method’s key disadvantage—that it dilutes existing shareholders and puts downward pressure on the stock price—was largely ignored due to Bitcoin’s strong upward trend at the time. CryptoQuant notes that Bitcoin firms that used PIPE programs have since experienced significant drops in their stock prices.

Vicious Cycle of Decline

For example, Kindly MD (NAKA), a Bitcoin DAT company, saw its share price surge from $1.88 in late April to a high of $34.77 in less than a month—an 18.5x increase. However, the stock has since plummeted by 97% to a low of $1.16 and is currently trading NEAR its PIPE price of $1.12.

CryptoQuant explained that other Bitcoin trust companies, including Strive (ASST), Cantor Equity Partners (CEP), and Empery Digital (EMPD), have seen their stock prices fall between 42% and 97%. Some stocks still trading above their PIPE issuance prices face a potential for up to an additional 50% decline.

While these DAT companies may have accumulated a large amount of cryptocurrency, their market valuation is falling even faster. This trend is seen in the rapid decline of their Market Value to Net Asset Value (mNAV).

Domino Effect

As Bitcoin’s price remains weak, the stock prices of DAT companies fall. This decline leads to selling by PIPE investors. If continues, companies may lose their primary method of raising additional operating capital, leaving their only option to sell their Bitcoin holdings for cash.

This would put more downward pressure on Bitcoin’s price, creating a vicious cycle in which Bitcoin’s price and DAT company stocks fall in tandem. CryptoQuant argues that a sustained Bitcoin rally is the only catalyst to prevent further decline in these stocks. Without such a move, the firm’s analysts believe many crypto equities will continue to fall toward or below their PIPE prices.