Kindly MD’s $5 Billion Bitcoin Investment May Negatively Impact the Overall Altcoin Market

Healthcare company Kindly MD, submitted an automatic shelf registration with the SEC on Tuesday, allowing them to distribute up to $5 billion in stocks as they broaden their capital funding following a recent $679 million Bitcoin acquisition.

“Bitcoin will act as our primary treasury reserve asset, as we aim to build a long-term Bitcoin position,” Kindly MD mentioned in the document.

The registration categorizes Kindly MD as a Well-Known Seasoned Issuer, granting the company greater flexibility in capital market access.

Additionally, it allows a variety of instruments beyond common stock, with distributions managed by underwriters such as Cantor Fitzgerald, TD Securities, and B. Riley Securities in the U.S., along with Canada’s Canaccord Genuity and others.

Recently, Kindly MD announced a $679 million Bitcoin acquisition through its subsidiary, Nakamoto Holdings, marking its inaugural acquisition under a new treasury reserve strategy, reinforcing its “conviction in Bitcoin” as “the ultimate reserve asset” for companies and institutions.

While the WKSI designation “clearly provides an edge in capital raising,” it also brings pressure “due to large issuing volumes and high market volatility risks,” stated Jay Jo, a senior analyst at Tiger Research, to Decrypt.

Impact on Altcoins

“Corporate exposure to crypto has, without hesitation, paved the way for integration into balance sheets and treasury strategies,” Kelvin Koh, co-founder and CIO of Spartan Group, a venture capital firm in Asia, told Decrypt. 

This trend has been observed since “the approval of U.S. Bitcoin ETFs in early 2024,” which aligned with the pro-crypto policies of the Trump administration that “played out as expected,” Koh noted.

These developments have “normalized crypto exposure” and “created opportunities for altcoin-focused digital asset treasuries,” he added.

However, the ongoing accumulation and expansion of Digital Asset Treasuries (DATs) could introduce broader trade-offs, in Koh’s view.

“While DATs bring substantial liquidity to the assets they target, this may currently occur at the expense of the larger altcoin market,” he remarked.

Koh co-authored a separate research paper discussing the future of DATs, where he traced the initial developments of the trend.

“DATs have been primarily focused on Bitcoin, with their appeal rooted in Bitcoin’s narrative as a limited, non-sovereign store of value acting as a hedge against fiat currencies,” Koh explained.

As a model, DATs depend significantly on raising equity to purchase cryptocurrencies, exposing them to high volatility that may restrict new capital and lead asset sales, potentially intensifying market downturns, according to the paper.

“When numerous firms engage in the same strategy, market stability becomes precarious,” Koh cautioned.

Decrypt has contacted Kindly MD for a response.