Analysts warn Bitcoin-focused treasuries may drain liquidity from altcoins.
Nasdaq-listed healthcare firm Kindly MD filed an automatic shelf registration statement with the SEC on Tuesday, electing to distribute up to $5 billion in stock as it expands its capital reach following a $679 million Bitcoin purchase last week.
“Bitcoin will serve as our primary treasury reserve asset, and we are focused on accumulating a long-term Bitcoin position,” Kindly MD stated in the filing.
The filing establishes Kindly MD as a Well-Known Seasoned Issuer, a designation that allows the company to tap capital markets with more flexibility.
It also authorizes a mix of instruments beyond common stock, with distribution handled by underwriters including Cantor Fitzgerald, TD Securities, and B. Riley Securities in the U.S., as well as Canada’s Canaccord Genuity, among others.
Last week, Kindly MD disclosed a $679 million Bitcoin purchase through its subsidiary, Nakamoto Holdings, marking the first acquisition under its new treasury reserve strategy in a move it said reinforces its “conviction in Bitcoin” as “the ultimate reserve asset” for corporations and institutions.
While the WKSI status “clearly gives a company an advantage in capital raising,” it also imposes pressure “due to the large issuance volumes and high market volatility risks,” Jay Jo, senior analyst at Tiger Research, told Decrypt.
“Institutional crypto exposure has, without fear, expanded into corporate balance sheets and treasury strategies,” Kelvin Koh, co-founder and CIO at Asia-based venture capital firm Spartan Group, told Decrypt.
This has been the case since “the approval of U.S. Bitcoin ETFs in early 2024,” which had aligned with the Trump administration’s pro-crypto policies that “have eventuated as promised,” Koh said.
Those events have “normalized crypto exposure” and “opened the door for altcoin-focused digital asset treasuries,” he added.
Yet the continued accumulation and expansion of DATs might open broader trade-offs, Koh opined.
“While DATs bring significant liquidity to the assets they target, for now this may be at the expense of the wider altcoin market,” he said.
Koh co-authored a separate research paper on the future trajectory of DATs, where he traced the trend’s first forays.
“DATs were almost exclusively Bitcoin-focused, with their appeal grounded in Bitcoin’s narrative as a scarce, non-sovereign store of value acting as a hedge against fiat currencies,” Koh wrote.
As a model, DATs rely heavily on raising equity to buy crypto, giving them high exposure to volatility that could cut off new capital and force asset sales that risk amplifying market declines, the paper argues.
“When hundreds of firms pursue the same strategy, the market structure becomes fragile,” Koh warned.
