Bitcoin News: Digital Asset Treasury (DAT) Cos House of Cards Falling?

In recent Bitcoin news, Digital asset treasury (DAT) companies face mounting pressure from two critical fronts.

Regulatory scrutiny intensifies, while share prices crater toward their Private Investment in Public Equity (PIPE) funding levels.

As The Wall Street Journal reported on Sept. 25, US prosecutors launched investigations into stock movements preceding crypto acquisition announcements, adding regulatory risk to an already fragile business model.

Bitcoin News: Regulators Target Crypto Treasury Stock Movements

The Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority contacted companies among the more than 200 firms that announced crypto-treasury strategies this year.

SEC officials warned firms about potential breaches of rules prohibiting the selective sharing of material nonpublic information before crypto acquisition announcements.

The regulatory probe comes as companies attempt to replicate Strategy’s success, which began accumulating Bitcoin in 2020 and popularized the corporate treasury strategy.

The timing of the investigation coincides with massive drawdowns across the sector, creating a perfect storm of regulatory and market pressures.

PIPE-Funded Companies Suffer Losses

A CryptoQuant report on Sept. 25 revealed a devastating performance among Bitcoin treasury companies that raised capital through PIPE programs.

The research showed share price drawdowns ranging from 42% to 97%, with stock prices gravitating toward their discounted levels following the PIPE issuance.

Kindly MD (NAKA) exemplified the sector’s volatility, surging 18.5 times after its PIPE raise before collapsing 97% back to its $1.12 PIPE price.

The stock crashed more than 50% in a single day when PIPE shares unlocked for trading, demonstrating the destructive power of supply overhangs.

Strive (ASST) traded at $3, down 78% from its 2025 high, while facing a potential 55% additional decline to its $1.35 PIPE price.

The company’s PIPE shares were scheduled to unlock in October, which could intensify selling pressure.

Cantor Equity Partners (CEP) similarly traded at $19.74 compared to its $10 PIPE price, suggesting a potential 50% drop if the stock reverted to issuance levels.

The combination of regulatory scrutiny and market pressure threatens to accelerate the “death spiral” scenarios predicted by analysts earlier this year.

Venture capital firm Breed warned in June that most Bitcoin treasury companies faced potential collapse when their market-to-net asset value (mNAV) premiums eroded.

The seven-phase collapse sequence begins with Bitcoin price declines triggering MNAV compression, making it difficult for fresh capital to access.

As debt maturities approach and margin calls trigger, companies face forced Bitcoin liquidations that further depress prices, creating cascading failures across the sector.

Standard Chartered noted in September that market saturation drove mNAV compression, with Strategy’s success spawning 89 imitators.

The bank predicted consolidation through acquisitions of weaker rivals trading at discounts.

Supply Unlocks Threaten Further Carnage

NYDIG research noted additional risks from pending share unlocks, with over 95% of new outstanding shares tied to incomplete transactions for many firms.

Once registrations became effective, substantial waves of selling could occur as early investors sought to liquidate their holdings.

Companies trading below their PIPE prices already demonstrated the model’s fragility.

Empery Digital (EMPD) traded at $7.94, representing a 21% discount to its $10 PIPE price despite implementing a $100 million share repurchase program.

The stock experienced a 42% drawdown from its peak in August. The concentrated nature of crypto treasury holdings amplified systemic risks.

CryptoQuant data revealed that these companies collectively held substantial Bitcoin positions, with potential forced sales capable of triggering broader market disruption.

Bitcoin News: Regulatory Uncertainty Compounds Market Stress

In further Bitcoin news, the SEC probe introduced additional uncertainty regarding the viability of the business model.

Selective disclosure violations could result in significant penalties and operational restrictions, further constraining already limited capital access for distressed companies.

Without sustained Bitcoin rallies to restore mNAV premiums, CryptoQuant concluded that many treasury companies remained poised to continue trending toward or below their PIPE prices.

The convergence of regulatory scrutiny, supply unlock pressure, and fundamental business model challenges created an unprecedented crisis for the digital asset treasury sector.