Convertible Note Deals Trigger Market Reaction
Crypto-linked stocks IREN and NAKA faced selling pressure following announcements of multimillion-dollar convertible note deals aimed at strengthening corporate finances. The move comes at a time when venture capital funding in the digital asset sector has seen a notable slowdown.
IREN (IREN), a Bitcoin mining firm, announced an $875 million convertible senior note offering, leading to a 4.9% drop in after-hours trading to $58.66, despite closing the regular session up 6.81%. Similarly, Kindly MD (NAKA) — a healthcare firm that merged with Bitcoin company Nakamoto — saw its stock decline 2.83% in after-hours following news of a $250 million, 5-year convertible note deal with Antalpha.
Market Caution Over Share Dilution
Convertible notes can raise red flags for investors, as they carry the potential for share dilution when converted into equity.
“Investors often react negatively to such deals because they anticipate reduced ownership value,” explained a digital asset analyst from a New York-based fintech firm.
IREN stated that proceeds will go toward general corporate purposes and working capital, while a portion will cover the cost of capped call transactions — a strategy designed to protect against excessive share dilution during note conversions. An additional $125 million in notes will also be available to initial purchasers.
Kindly MD’s financing aims to expand its Bitcoin treasury holdings and replace an existing $203 million Bitcoin-secured loan from Two Prime Lending Limited. The firm emphasized that the structure of the deal is intended to provide “less dilution risk compared to standard convertible debt.”
Antalpha will also extend an interim Bitcoin-backed loan until the completion of the financing.
David Bailey, CEO of Kindly MD, stated that the collaboration “demonstrates the power of Bitcoin companies supporting each other”, highlighting the goal to build future financing models tailored for Bitcoin treasury firms.
Venture Capital Funding Remains Tight
According to the latest market research, the crypto venture capital landscape shrank by 59% in available funding and saw a 15% decline in deal count compared to the previous quarter — signaling investor caution across the digital asset industry.
As companies like IREN and Kindly MD turn to convertible notes for liquidity, the market continues to weigh the trade-off between strategic growth and shareholder dilution, shaping the next phase of crypto corporate financing.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.