Bitcoin vault Nakamoto plunged 99%, and is selling its own BTC

Nakamoto's share price fell about 99% from its May 2025 high.

The company sold Bitcoin at a huge realized loss to maintain operations.

In order to maintain Nasdaq's listing status, it had to conduct a 40-to-1 reverse stock split.

Bailey used diluted public stock to acquire two of his companies.

mNAV Flywheel Effect: Create wealth when it goes up and devour itself when it goes down

Nakamoto Inc. (NASDAQ: NAKA), a bitcoin reserve company formed by BTC Inc. founder David Bailey, its share price has fallen about 99% since it hit a high of $34.77 in May 2025 after the announcement of its merger with medical operator KindlyMD. Bloomberg reported this week that Bailey raised about $760 million (company documents show about $710 million) to hoard Bitcoin. The company's stock price is now close to $7.12 and its market value is about $127.4 million. It is currently seeking acquisitions that generate cash., and prioritizes buying back shares rather than increasing its holdings in Bitcoin.

Bailey lobbied Trump to support the cryptocurrency stance in 2024 and achieved remarkable results. His hedge fund, 210k Capital, made a 640% return by investing in companies that turned to Bitcoin reserves. Political influence is transformed into policy, but not into stock prices.

The model was originally simple and straightforward: issue shares at a premium higher than the value of the Bitcoin position, use the proceeds to buy more Bitcoin, and repeat the operation as the premium expands. This premium is measured through mNAV, which is the ratio of the market's valuation of the company to the value of the Bitcoin dollar it holds. Nakamoto's mNAV once reached about 23 times, but now it has dropped below 1 times.

When mNAV is less than 1, each new issue transfers value from existing holders rather than creating value. The flywheel does not slow down, but runs in the opposite direction, and it happens just when the company needs capital most.

Comparison of key indicators

Stock price: May 2025 high of US$34.77, current (after split) approximately US$7.12
Market value: billions of dollars vs approximately US$127.4 million
Shares outstanding: approximately 696 million shares vs approximately 17.4 million shares
mNAV: Approximately 23 times vs less than 1 times
First quarter 2026 revenue and loss: US$2.3 million vs US$238 million

Purchased for US$118,000 and sold for US$70,000 to pay wages

In March 2026, Nakamoto disclosed that it sold approximately 284 bitcoins for approximately US$20 million, with an average price of approximately US$70,000 per coin, while the weighted average purchase price was US$118,171, and a loss of approximately 40% has been realized. The proceeds are used to replenish working capital and acquire new business.

For a company whose core philosophy is permanent holding, selling Bitcoin to maintain operations confirms that financing channels have been closed. The net loss for the first half of 2026 reached US$372 million. There are currently approximately 5765 bitcoins remaining, valued at approximately US$454 million based on nearly US$78,800 in bitcoins, some of which have been used as collateral for over-mortgage agreements. Critics believe that if Bitcoin falls further, these collateral could be confiscated.

Special Committee, Fairness Opinion and 58% Dilution

On February 20, 2026, Nakamoto completed a review of BTC Inc. (publisher of Bitcoin magazine and Bitcoin conference operator) and UTXO Management (consultant to 210k Capital). Holders of securities received 364,795,104 shares, which was valued at approximately US$81.63 million based on the previous day's closing price of US$0.248. Bailey is the founder of the two acquired companies and serves as chairman of the acquirers. The independent directors formed a special committee and hired B. Riley issued a fair opinion, a procedural response to apparent objections, but did not change the results of public shareholders-who suffered a dilution of about 58% in the same quarter, and the initial investment was used to buy Bitcoin near the high. DL News calls the structure "Theater of the Absurd."

The acquired assets themselves can generate actual revenue: for the twelve months ended September 2025, total revenue was approximately US$80.5 million, and EBITDA was approximately US$34.2 million.

Timeline review

May 2025: KindlyMD merger announcement was released, and its share price hit a high of US$34.77.
August 2025: The merger is completed, and the lifting of PIPE triggered a 96% plunge.
February 2026: Acquisition of BTC Inc. and UTXO for US$81.6 million in stock.
March 2026: Sold 284 bitcoins and raised US$20 million for operations.
May 22, 2026: Conduct a 40 - 1 reverse stock split to restore Nasdaq compliance requirements.

Spot ETFs eliminate reason to pay premiums

Nakamoto is not the only company to be reckless, but the most sensitive to industry overall repricing. This re-pricing has left 77% of corporate bitcoin reserve companies at a loss. From 2024 to early 2025, after Japanese small-cap companies such as Metaplanet announced their switch to Bitcoin reserves, their share prices far exceeded the dollar value of their Bitcoin books. Investors are paying for "access to channels."

Direct custody and spot ETFs make this channel free. When the premium narrowed, companies that raised money through cheap convertible bonds retained the value of their options; while companies that raised money through selling high-priced stocks lost their ability to raise money completely.

Bailey is buying shares he had advised traders to sell

Bailey denies fraud allegations, calling the criticisms noise, and said at the 2026 Bitcoin Asia Conference that corporate adoption remains necessary for wider Bitcoin adoption. He bought 191,448 shares on the open market at the end of May for an average price of US$5.19, raising his shareholding to approximately 18.25%.

The traditional medical clinic business closed in June 2026, and the company is currently positioned as an operator of Bitcoin's native media, asset management and consulting businesses. Whether this positioning can be maintained depends on loan agreements for the remaining reserves-agreements that have not yet been publicly renegotiated and have collateral thresholds. A further decline in Bitcoin will first test these thresholds before media revenue has any impact on profits.