Healthcare company KindlyMD (ticker: NAKA) saw its shares drop sharply on Tuesday after announcing a massive $5 billion at-the-market equity offering program. The funds raised will be used primarily to expand the company's Bitcoin holdings, alongside other corporate purposes like working capital and acquisitions.
The move follows KindlyMD's recent merger with Nakamoto Holdings and its adoption of a Bitcoin treasury strategy. Just last week, on August 19, the company acquired 5,744 BTC for approximately $679 million at a weighted average price of $118,204 per Bitcoin. CEO David Bailey, who also serves as a crypto policy adviser to the Trump administration, stated this offering is "the natural next phase of our growth plan" following the merger.
Bailey acknowledged on X that it will "take a while to build the necessary liquidity" but emphasized the program will be "a critical tool" for executing their Bitcoin accumulation strategy. When questioned about transparency compared to Michael Saylor's MicroStrategy, Bailey committed to becoming "world-class at transparency and governance" over the coming year.
The market reaction was immediate and negative for KindlyMD's stock, which ended the day down 12% and fell another 2.7% in after-hours trading to $7.85. Despite this drop, the stock has surged 330% since early May when its Bitcoin strategy was first announced, and is up 550% year-to-date.
Analysts warn that this trend of corporate Bitcoin accumulation may come at the expense of altcoins. Kelvin Koh, co-founder and CIO at Spartan Group, noted that while Digital Asset Treasuries (DATs) bring significant liquidity to their target assets (primarily Bitcoin), this may drain liquidity from the wider altcoin market. He traced this trend back to the approval of U.S. Bitcoin ETFs in early 2024 and the pro-crypto policies of the Trump administration.
Koh's research paper warns that when hundreds of firms pursue the same Bitcoin accumulation strategy, the market structure becomes fragile due to high exposure to volatility that could cut off new capital and force asset sales that amplify market declines.
In a related development, Canadian psychedelic truffles company Red Light Holland announced it has purchased 10,600 shares of the BlackRock iShares Bitcoin Trust ETF (IBIT) and is working with a leading exchange to implement algorithmic trading strategies through Arch Public.