American Bitcoin (NASDAQ: ABTC) experienced a significant stock decline on Tuesday, plunging 39% due to a wave of selling pressure triggered by the unlocking of shares held by early investors.
Eric Trump, the Chief Strategy Officer of American Bitcoin, took to social media platform X to address the situation, explaining that the unlocking of pre-merger private placement shares was a key factor behind the market volatility. “Today our pre-merger private placement shares unlocked — these early investors are freely available to cash in on their profits for the first time which is why we will see volatility,” he stated.
The catalyst for this development can be traced back to a substantial private equity placement, amounting to $220.1 million, that American Bitcoin completed on June 27, 2025. However, filings with the U.S. Securities and Exchange Commission (SEC) regarding this offering do not appear to stipulate specific lock-up periods for investors, raising questions about regulatory frameworks surrounding the trading of these shares.
Sue Ennis, the Head of Investor and Government Relations for Hut 8, confirmed the occurrence of these unlocks for investors involved in the June 27 private placement when speaking with Blockspace. Under normal circumstances, as outlined in SEC’s Rule 144, shares from the private placement would not be freely tradable for non-affiliate investors until late December, unless certain resale exemptions were applicable.
American Bitcoin made its debut on the Nasdaq on September 3, 2025, after successfully executing a reverse merger with Gryphon Digital. In the lead-up to this merger, Hut 8 significantly reshaped its strategy by incorporating American Bitcoin as a majority-owned subsidiary, exchanging an extensive portfolio of bitcoin mining hardware for an 80% stake in the company.
The drastic sell-off in American Bitcoin’s shares occurred against a backdrop of declining prices across the bitcoin-related equity market. Many major bitcoin mining stocks have faced substantial losses, with month-over-month declines ranging from 20% to 40%.
These developments suggest a tumultuous start for American Bitcoin in the public arena, as both investor sentiment and the broader market environment continue to pose challenges for the company.
