Has the PIPE Model Failed for Bitcoin Cash Companies? The collapse in stock prices of two notable deals recently completed – KindlyMD (NAKA) and Strive (ASST) suggests as much.
A PIPE, or Private Investment in Public Equity, is a financing mechanism through which institutional investors purchase shares directly from a publicly traded company at a predetermined price, usually below market value, allowing the company to raise capital at a much faster pace without the lengthy and costly process of a traditional public offering.
PIPE transactions are often used by companies undergoing reverse mergers or going public through a special purpose acquisition company (SPAC), and they have recently become a favored financing strategy among Bitcoin treasury companies seeking to quickly grow their Bitcoin holdings.
Despite their best efforts, recent examples suggest that the PIPE model not only struggles to create shareholder value, but also quickly incinerates investor capital.
This feature is part of CoinDesk Bitcoin Treasuries theme week, sponsored by Genius Group.
A case study for PIPE
The company that adopted a PIPE was healthcare company KindlyMD (NAKA), which completed a reverse merger in May 2025, resulting in Bitcoin cash company Nakomoto becoming a wholly owned subsidiary and famous Bitcoin advocate David Bailey becoming CEO. The centerpiece of this transaction was a PIPE financing agreement that raised $563 million in gross proceeds to primarily fund bitcoin purchases.
Additionally, the company issued a $200 million senior secured convertible note to Yorkville Advisors, which was subsequently closed and replaced with another note. This brought NAKA’s total funding to $763 million.
The terms of the PIPE were as follows: The first round raised $510 million at $1.12 per share in May, followed by another $51.5 million at $5 per share in June.
These funds were deployed to accumulate bitcoin, with NAKA purchasing 21 BTC for $2.3 million in July and an additional 5,743 BTC for $679 million in August.
Despite Bitcoin’s rapid accumulation, the company’s market performance has not kept pace.
Since the reverse merger in May, NAKA shares have fallen more than 95%, from a high of $30 to the current $0.80. Its market net asset value (mNAV) has also fallen below 1, indicating that the market now values the company at a lower price than the value of its bitcoin and underlying assets.
The second company to adopt a PIPE strategy was Strive (ASST), founded by Vivek Ramaswamy, which merged with Asset Entities in a SPAC deal announced in May and finalized in September.
Strive raised $750 million in gross proceeds through a PIPE priced at $1.35 per share, representing a 121% premium to ASST’s pre-merger stock price.
The proceeds funded the purchase of 5,885 BTC and the structure was entirely debt-free. In addition to the PIPE, Strive announced a $450 million stock offering and a $500 million stock repurchase plan intended to counteract dilution.
The company also signed an all-stock deal to acquire another Bitcoin cash company trading at a price lower than the value of its stack – Semler Scientific and its 5,048 bitcoins.
If approved, the pending acquisition of Semler Scientific would increase Strive’s bitcoin holdings to 11,700 BTC. Despite these moves, ASST’s stock performance mirrored that of NAKA, falling more than 90% from its all-time high in May, hitting $12, now trading around $1 per share. Similar to NAKA, ASST’s mNAV is just below 1.
Caution is the watchword for the future
The disjointed performance of NAKA and ASST calls into question at least two other Bitcoin cash SPAC/PIPE deals that have yet to close.
One of them is the merger between Twenty One Capital (XXI) — led by Jack Mallers — and Cantor Equity Partners (CEP). The company announced its PIPE transaction in April, becoming the third largest Bitcoin treasury company with 43,514 BTC. As with previous PIPE transactions, initial post-merger enthusiasm caused CEP’s stock price to rise from $10 to $60, but the stock has now retreated to around $20.
Additionally, Bitcoin Standard Treasury Company (BSTR), led by Adam Back, plans to go public via a SPAC merger with fellow vehicle Cantor (CEPO) and aims to raise a total of $3.5 billion, including up to $1.5 billion via a PIPE, scheduled to launch in the fourth quarter.
CEPO shares peaked at $16 during the initial enthusiasm following the announcement and have since retreated to the $10.50 area.
In a nutshell, these deals show that while PIPEs are a way to accelerate funding for Bitcoin cash companies, they are also a potentially risky investment that warrants caution.
