Companies once highly sought after in the capital markets and focused on accumulating cryptocurrencies now seem to have become “hot potatoes” that investors are eager to sell off. According to SEC filing documents, the venture capital fund Founders Fund, led by PayPal co-founder and Silicon Valley venture capital king Peter Thiel, sold all of its holdings in the crypto accumulation company ETHZilla at the end of last year.
Last August, Founders Fund still held a 7.5% stake in the company, but within just a few months, this large holding was “zeroed out.”
ETHZilla, formerly known as underperforming biotech stock 180 Life Sciences, later pivoted to a strategy of holding Ethereum reserves, at one point accumulating 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, market hot money was flooding into “crypto accumulation stocks,” and many companies, seeing the success of the strategy, jumped on the bandwagon, attempting to boost their valuations through crypto-related themes.
However, the good times did not last. As the hype faded and the bubble 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 up to $74.5 million worth of ETH in December. This move to sell core assets 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 high.
Seeing the crypto accumulation bubble 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 business called ETHZilla Aerospace. This time, they shifted away from holding cryptocurrencies and turned their focus to the hottest market trend: tokenization of real-world assets (RWA).
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