Once highly sought after in the capital markets and focused on accumulating cryptocurrencies, companies like this now seem to have become “hot potatoes” that investors are eager to sell off. According to filings with the U.S. Securities and Exchange Commission (SEC), the venture capital fund Founders Fund, led by PayPal co-founder and Silicon Valley venture capital titan Peter Thiel, fully liquidated its holdings in the crypto accumulation company ETHZilla at the end of last year.
Just last August, Founders Fund still held a 7.5% stake in the company, but within a few months, this substantial holding was “zeroed out.”
ETHZilla, formerly known as the underperforming biotech stock 180 Life Sciences, later pivoted to a strategy of holding Ethereum reserves, reaching a peak of over 100,000 ETH.
Although SEC filings did not disclose the exact timing and prices of the fund’s buying and selling activities, reviewing the initial disclosure of holdings in August last year coincides with ETHZilla’s stock price soaring, reaching an all-time high of nearly $107.
At that time, hot money was flooding into “crypto accumulation stocks,” with many companies jumping on the bandwagon after seeing the success of the strategy, attempting to boost their valuations through blockchain-related themes.
However, the good times did not last. As the hype faded and bubbles burst, many of these once-celebrated crypto accumulation companies quickly lost their shine, and ETHZilla was no exception.
To ease the heavy convertible bond repayment pressure, ETHZilla first sold $40 million worth of ETH in October last year, then sold an additional $74.5 million worth in December. This core asset liquidation to pay off debt completely shattered investor confidence.
By December 30 last year, ETHZilla’s stock price had plummeted to a miserable $4.99, a roughly 95% drop from its summer peak.
Seeing the bubble of the crypto accumulation strategy burst completely, ETHZilla, now in dire straits, decided to try another “transformation.” In February this year, the company announced the spin-off of a new entity called ETHZilla Aerospace. This time, they shifted away from accumulating crypto and turned their focus to the hottest market trend: tokenization of real-world assets (RWA).
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