ETHZilla Ethereum selloff is quickly turning into a lesson for any company thinking about chasing hype instead of keeping their balance sheets in check.
Not even half a year after jumping into Ethereum as a treasury strategy, ETHZilla backed by Peter Thiel just admitted it sold 24,291 ETH for $74.5 million. They needed the cash to cover debt. That sale basically shuts the door on their short-lived run as a pure Ethereum treasury play. Now they’re shifting gears, betting on tokenization to become their main business.
They also said they’re dropping mNAV, the metric they used to hype up the value of their crypto holdings compared to the whole company. For weeks, they talked up mNAV to investors. Now they’re moving on, putting some distance between themselves and that old pitch.
Honestly, the timing couldn’t be worse.
A Strategy That Unraveled Fast
ETHZilla jumped into the Ethereum treasury game last August, right after ditching its old identity as 80 Life Sciences Corp a biotech company chasing new drugs. The pivot wasn’t subtle. Suddenly, they were all-in on stacking ETH, making money from staking, and trying out different on-chain strategies.
For a while, it looked like a genius move. ETHZilla climbed to become the ninth-biggest Ethereum treasury holder, sitting on 93,800 ETH (about $280 million if you go by today’s price). But then Q4 hit, crypto prices dropped, and the cracks in their plan started to show.
By early December, their mNAV dropped below 1. Translation? The market thought the company was worth less than just its crypto. That made it tough to sell new shares or bring in fresh money.
Back in late October, ETHZilla had already offloaded $40 million in ETH to buy back shares, hoping to keep mNAV afloat. But their latest round of Ethereum sales makes it clear: volatility wasn’t the real issue here. It was leverage that did them in.
Community Reaction Turns Brutal
The rapid sell-off caught a lot of heat from analysts and investors. One person didn’t hold back:
“NAV was 30/share 2 months ago…this is embarrassing. I haven’t seen such a quick destruction of value and poor management decision-making in 25 years outside of SPACs.”
That kind of reaction gets at something bigger. Crypto treasuries only really work if a company can hang on through tough markets if they don’t get forced to dump assets at the worst possible time. ETHZilla just couldn’t pull it off.
As their debt piled up, they basically had to unload ETH when prices were already down. Instead of weathering the storm, they locked in a loss and made things worse.
Why ETHZilla Had No Room to Wait During the ETHZilla Ethereum Selloff
When mNAV drops under 1, selling shares to buy more crypto just eats into what’s left. Borrowing gets pricey, too. If a firm doesn’t have other sources of revenue, it’s only a matter of time before they have to liquidate.
That’s where ETHZilla took a completely different path from companies like Strategy. Strategy built up a USD reserve to make sure they wouldn’t have to sell their Bitcoin if the market stayed bad for a long time. ETHZilla didn’t have that safety net.
And with the market looking shaky all the way into 2026, sticking with the ETH-heavy treasury plan would’ve meant more forced sales down the line. ETHZilla didn’t choose to dump their Ethereum. They had to. It was a matter of survival.
Pivot to Tokenization Raises New Questions
ETHZilla’s choice to dive into tokenization stands out most struggling digital asset treasuries don’t make moves like this. Crypto investor Mike Dudas summed it up like this:
“First DAT I’ve seen explicitly shift from mNAV (discontinued) to operating business model. RWA tokenization is occurring on many chains, interesting to see if they keep “ETH” as the core name or shift to something more reflective of how the segment is developing.”
Tokenization is definitely a real area of growth, but this shift brings up some trust issues. Investors who bought ETHZilla thinking it was a play on Ethereum are suddenly looking at a totally different business.
And let’s be honest, that kind of switch never goes smoothly.
Ethereum Faces Heavy Outflows
ETHZilla’s Ethereum selloff is happening while Ethereum itself keeps looking shaky.
Just in the past week, ETH treasury firms let go of 107,700 ETH. On top of that, Ethereum ETFs lost another 116,000 ETH. All in, that’s nearly $670 million in outflows in just seven days.
You can see the pressure in the price. ETH can’t get back above $3,000. The daily chart shows lower highs stacking up, and trading volume keeps falling off so people are selling, not buying.
Technical Analysis Snapshot
Technically, Ethereum looks shaky right now.
The price sits below both its 50-day and 200-day moving averages. There’s a hint of bullish divergence in the momentum indicators, but nothing strong enough to say a reversal is here. The real support is hanging out near $2,850. If Ethereum drops below that, it’s got room to fall all the way to $2,600.
Right now, sellers keep stepping in every time the price tries to bounce. Unless outflows ease up and real demand comes back, rallies probably won’t last.
Final Thoughts
The ETHZilla Ethereum selloff isn’t just some company offloading its ETH stash. It really shows how shaky corporate crypto strategies can get when there’s no real liquidity buffer, no solid plan for long-term funding, and nobody’s prepared for things to go south.
ETHZilla sold off its Ethereum to pay off debt, dropped mNAV, and scrambled to focus on tokenization all because they felt the heat. At the same time, Ethereum ETFs and treasury companies watched almost $670 million vanish in just one week.
The whole thing’s a warning shot for any struggling firm thinking about crypto treasuries. If you don’t manage your capital with discipline, the market just eats you alive.
