One of the most hyped Bitcoin treasuries is imploding.
Nakamoto Holdings, which merged with healthcare company KindlyMD in August, crashed more than 50% on Monday, just days after its PIPE shares unlocked last week, allowing insiders to dump their stock on the market.
Shares for Nakamoto are down 96% from its May peak. Today, they trade at $1.50.
The collapse marks the first major blowup in the Bitcoin treasury boom that's seen over 170 companies pile into the trade.
"Hoe-Lee-Smokes. The crypto treasury narrative has been annihilated," wrote renowned crypto trader, Scott Melker, in his Tuesday newsletter.
"KindlyMD didn't just crash and burn yesterday; it went down in scorching hot flames that would make a July 4th fireworks show in NYC look like four kindergartners playing with sparklers," added Melker.
It's the sharpest single collapse yet in the corporate Bitcoin boom -- and it highlights a dismal reality for Bitcoin treasuries.
One in three of the more than 170 firms in the sector now trade below the value of the Bitcoin they own. Some are even resorting to accounting gimmicks to avoid delisting from the New York Stock Exchange.
The killer blow came from the PIPE unlock.
A Private Investment in Public Equity allows select investors to buy shares at a fixed price before those shares can trade freely on the open market.
In Nakamoto's case, insiders bought shares at $1.12. They then watched the stock rocket to about $34 in May, and began to sell off their stock.
When the PIPE unlocked last Friday, all hell broke loose.
David Bailey, Nakamoto's head honcho who helped Donald Trump embrace cryptocurrency as part of his presidential campaign last year, rushed to calm the panic.
In a late-night letter to shareholders, he called the volatility "not unusual," even as the stock was down more than 90% from its peak.
Bailey framed the collapse as part of "establishing our base of aligned shareholders."
He even urged "those shareholders who have come looking for a trade" to exit.
The timing exposes the absurdity of the pump.
KindlyMD announced the Nakamoto merger May 12, but didn't complete it until mid-August. Moreover, the firm didn't buy its first Bitcoin until late August.
But Nakamoto surged anyways -- as much as 2,700% at one point, mainly based on what might happen, and not actual Bitcoin holdings.
Still, KindlyMD, did purchase 5,765 Bitcoin worth about $665 million, and is now the 16th largest corporate Bitcoin holder, according to BitcoinTreasuries.
They are part of a growing trend of corporations adding Bitcoin to their balance sheet -- and calling it a business model.