Once hailed as the benchmark for the sixth largest Ethereum strategic reserve, it has now begun to sell coins to survive. The blockchain story of public companies ultimately cannot compete with the reality of cash flow.
Just this week, as I was browsing through the documents of the U.S. Securities and Exchange Commission, a piece of news made me shake my head: ETHZilla, the company once revered by countless crypto enthusiasts as a benchmark for 'Ethereum strategic reserves,' is now massively selling off the ETH they vowed to hold long-term.
According to the latest documents, starting from December 15, ETHZilla has sold 24,291 ETH at an average price of only $3068, with this sale accounting for more than a quarter of their total holdings.
Even more shocking is that the company clearly stated that it might sell all these 'strategic reserves' in the future to repay debts and maintain business operations.
From banner to retreat: a rapid transformation of a 'strategic reserve'.
Do you remember that in August this year, ETHZilla was still the star of the market? This biotech company, formerly known as 180 Life Sciences, announced its transformation into an Ethereum reserve platform, with its stock price skyrocketing more than tenfold in just one month.
At that time, they attracted many well-known investors, including Peter Thiel's Founders Fund, with Thiel and related funds holding a total stake of up to 28.3%. Company executives boasted that they would become the 'benchmark for on-chain financial management of public companies.'
At its peak, ETHZilla held over 100,000 ETH, worth about $490 million, and announced a stock buyback plan of up to $250 million, clearly positioning itself as the largest institutional supporter of Ethereum.
Selling coins to survive: strategic reserves give way to real bills.
However, the winter of the crypto market will never be bypassed by beautiful stories.
ETHZilla's recent sell-off is not the first. As early as the end of October, the company sold about $40 million worth of Ethereum for stock buybacks. The $74.5 million ETH from this sell-off is clearly designated for repaying senior secured convertible notes.
More realistically, this once-ambitious company needs to pay high interest and dividends every year. A similar model, MicroStrategy, needs to pay about $824 million in interest and dividends annually, while its software business itself cannot generate enough free cash flow to cover these expenses.
The myth of 'strategic reserves' is breaking. When cash flow is tight, even the most beautiful stories must make way for reality.
The collective dilemma of the coin-holding model of publicly listed companies.
ETHZilla is not an isolated case. MicroStrategy, which pioneered this model, has also suspended purchases of Bitcoin and instead increased its cash reserves to $2.19 billion.
The business model of accumulating cryptocurrencies through publicly listed companies is facing a comprehensive test. Since hitting a historical high at the beginning of October, Bitcoin's price has dropped by about 30%, while MicroStrategy's stock price has fallen more than 50% during the same period.
The core of the problem is: why should tokens be more valuable just because they are held by a publicly listed company? Especially after the cryptocurrency prices plummet, this logic becomes even less tenable.
These companies face a fatal problem: when their stock price falls below the value of the cryptocurrencies they hold, it becomes difficult for them to continue acquiring tokens by issuing stocks, which was their main method of expanding reserves previously.
The true nature of speculators: cash flow never lies.
In the past year or two, 'strategic reserves' indeed sounded very good; companies holding ETH as a long-term asset not only showcased their layout in the blockchain field but also beautified their balance sheets.
However, ETHZilla's actions reveal a harsh truth: when a company faces survival pressure, even the most 'strategic' reserves can turn into cash machines.
We have to face a fact: many publicly listed companies pouring into the crypto world are essentially speculators rather than believers. They loudly promote 'strategic transformation' when the market is rising, but quickly sell off 'strategic assets' when cash flow is tight.
Behind this behavior is a simple logic: reserves are a vision, but life must rely on cash.
Insights for ordinary investors: how to view institutional behavior.
When we see 'benchmarks' like ETHZilla starting to sell off, what should ordinary investors pay attention to?
Do not blindly follow the 'strategic reserve' narrative of publicly listed companies. The primary responsibility of these companies is to their shareholders, not to promote the development of the crypto industry. When situations change, their strategies may turn 180 degrees.
Focus on cash flow and fundamentals. Whether a company has enough cash flow to sustain operations is more important than how many crypto assets it holds. Debt maturity dates wait for no one.
Diversify investments. Avoid over-concentration in a single narrative or the actions of a few companies. The crypto market itself is already volatile enough without adding additional single risks.
Understand market cycles. When institutions start liquidating reserves for cash, it often means the market is entering a tougher phase. This may be a process of risk release, but it may also signal that a better entry point is about to come.
Conclusion: survival over narrative.
In the crypto world, we have seen too many glamorous stories and lofty visions. But ETHZilla's sell-off reminds us of an eternal truth: survival is always the top priority.
When 'strategic reserves' meet company bills, and when beautiful narratives collide with debt maturity, cash flow never lies. This is not only a lesson for ETHZilla but also a reality the entire crypto industry needs to face.
For us ordinary investors, the key is not to blindly follow the 'strategies' of certain companies, but to cultivate the ability to recognize real value. In the crypto market, what is truly worth holding long-term are those projects that can continuously create real value regardless of market fluctuations.
When the tide goes out, we can see who is truly building and who is just speculating. ETHZilla's sell-off may be an important signal of this cycle's transformation.
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