First Ethereum Treasury Firm Sells ETH For Buybacks: Death Spiral Incoming?
Ethereum-focused treasury firm ETHZilla stated it has offered roughly $40 million price of ether to fund ongoing share repurchases, a maneuver geared toward closing what it calls a “vital {discount} to NAV.” In a press assertion on Monday, the corporate disclosed that since Friday, October 24, it has purchased again about 600,000 widespread shares for about $12 million underneath a broader authorization of as much as $250 million, and that it intends to proceed shopping for whereas the {discount} persists.
ETHZilla Dumps ETH For BuyBacks
The firm framed the buybacks as balance-sheet arbitrage fairly than a strategic retreat from its core Ethereum publicity. “We are leveraging the energy of our stability sheet, together with lowering our ETH holdings, to execute share repurchases,” chairman and CEO McAndrew Rudisill stated, including that ETH gross sales are getting used as “money” whereas widespread shares commerce under internet asset worth. He argued the transactions could be instantly accretive to remaining shareholders.
ETHZilla amplified the message on X, saying it will “use its robust stability sheet to help shareholders by means of buybacks, cut back shares obtainable for brief borrow, [and] drive up NAV per share” and reiterating that it nonetheless holds “~$400 million of ETH” on the stability sheet and carries “no internet debt.” The firm additionally cited “current, concentrated brief promoting” as an element retaining the inventory underneath stress.
The market-structure logic is simple: when a digital-asset treasury trades under the worth of its coin holdings and money, shopping for again inventory with “coin-cash” can, in principle, collapse the {discount} and elevate NAV per share. But the optics are contentious inside crypto as a result of the mechanism requires promoting the underlying asset—right here, ETH—to buy fairness, probably weakening the very treasury backing that traders initially sought.
Death Spiral Incoming?
Popular crypto dealer SalsaTekila (@SalsaTekila) commented on X: “This is extraordinarily bearish, particularly if it invitations related conduct. ETH treasuries usually are not Saylor; they haven’t proven diamond-hand will. If treasury corporations begin dumping the coin to purchase shares, it’s a demise spiral setup.”
Skeptics additionally zeroed in on funding selections. “I’m principally curious why the corporate selected to promote ETH and never use the $569m in money that they had on the stability sheet final month,” one other analyst Dan Smith wrote, noting ETHZilla had simply stated it nonetheless holds about $400 million of ETH and thus didn’t deploy it on recent ETH accumulation. “Why not simply use money?” The query cuts to the core of treasury signaling: utilizing ETH as a liquidity reservoir to defend a reduced fairness will be learn as rational capital allocation, or as capitulation that undermines the ETH-as-reserve narrative.
Beyond the buyback, a retail-driven storyline has quickly shaped across the inventory. Business Insider reported that Dimitri Semenikhin—who lately grew to become the face of the Beyond Meat surge—has focused ETHZilla, saying he bought roughly 2% of the corporate at what he views as a 50% {discount} to modified NAV. He has argued that the market is misreading ETHZilla’s stability sheet as a result of it nonetheless displays legacy biotech outcomes fairly than the present digital-asset treasury mannequin.
The similar report cites liquid holdings on the order of 102,300 ETH and roughly $560 million in money, translating to about $62 per share in liquid belongings, and calls out a 1-for-10 reverse break up on October 15 that, in his view, muddied the optics for retail. Semenikhin flagged November 13 as a possible catalyst if outcomes present the pivot to ETH producing income.
The firm’s personal messaging emphasizes the discount-to-NAV lens fairly than a change in technique. ETHZilla informed traders it will preserve shopping for whereas the inventory trades under asset worth and highlighted a aim of shrinking lendable provide to blunt short-selling stress.
For Ethereum markets, the speedy circulate impact is proscribed—$40 million is marginal in ETH’s day by day liquidity—however the second-order danger flagged by merchants is behavioral contagion. If different ETH-heavy treasuries observe the playbook, promoting the underlying to purchase their very own inventory, the circulate may grow to be pro-cyclical: cash are offered to shut fairness reductions, the promoting pressures spot, and wider reductions reappear as fairness screens rerate to the weaker mark—repeat.
That is the “demise spiral” situation skeptics warn about when the treasury asset doubles as the corporate’s sign of conviction.
At press time, ETH traded at $4,156.
