When a listed company's 'strategic reserve' begins to liquidate, you know the market has entered the deep water zone.
I sat in front of the computer, looking at ETHZilla's latest SEC filing, and couldn't help but laugh. It wasn't schadenfreude, but rather a sense of helplessness at this familiar plot. Four months ago, this company was still a star enterprise in the Ethereum strategic reserve, hailed by countless people as the 'sixth largest Ethereum treasury.'
Now, it has unhesitatingly sold 24,291 ETH, accounting for a quarter of its total holdings, to repay debts.
Ironically, the company has clearly stated that it may sell everything in the future, which means that the so-called 'strategic reserve' has turned into an 'emergency reserve.'
01 The Rise and Fall of Myths
Let's review the brief glory of ETHZilla. This company was originally an obscure biotechnology firm named 180 Life Sciences Corp. It suddenly announced on August 18 of this year that it would transform into a digital asset management company focused on accumulating Ethereum.
After the transformation, the company's stock price soared from $30 to over $100, instantly becoming the darling of the market. At that time, the cryptocurrency market was filled with optimism, and publicly listed companies holding digital currencies were seen as innovative.
ETHZilla is not alone. Following the success of the 'public company coin accumulation' model pioneered by MicroStrategy, a large number of companies have followed suit. Statistics show that as of August 2025, 59 real enterprises have included Ethereum in their balance sheets, with the top ten publicly listed companies holding a total of over 1.97 million ETH.
Behind this carnival lies a fatal problem: why should tokens be worth more simply because they are held by publicly listed companies? No one has deeply considered this question until the market cooled.
02 Cash Flow is King, Faith Cannot Defeat Reality
The official reason for ETHZilla's sale of ETH is to redeem senior secured convertible notes. Simply put, it's selling coins to pay off debt.
This is not ETHZilla's first sale of ETH. Just at the end of October, the company sold about $40 million worth of Ethereum for stock buybacks. Two large-scale sell-offs in four months fully illustrate the fragility of this business model.
The core issue lies in cash flow. According to estimates, models like Strategy's coin accumulation require paying about $824 million in interest and dividends each year, while the company's software business cannot generate sufficient free cash flow to cover these expenses.
When the capital market is generous, companies can raise funds by issuing stocks or bonds; but when market sentiment turns sour and financing channels are restricted, these 'strategic reserves' of digital assets become the first to be liquidated.
03 The Inherent Flaws of the Coin Accumulation Model
Many people liken the coin accumulation of publicly listed companies to 'corporate ETFs,' but this is actually a misunderstanding. ETFs have clear net value calculations and arbitrage mechanisms, whereas publicly listed companies holding cryptocurrencies face many issues.
The instability of mNAV (Net Asset Value) discounts or premiums is a primary issue. When the market is optimistic, the company's stock price may be much higher than the value of the cryptocurrencies it holds; whereas in a pessimistic market, it could be deeply discounted.
While announcing the sale of ETH, ETHZilla stated that it would stop publicly disclosing the mNAV panel. This move is quite symbolic, as if to say, 'Since the data doesn't look good, let's not disclose it anymore.'
The real fatal flaw is that these cryptocurrencies do not generate cash flow themselves. Traditionally, companies holding government bonds or high-dividend stocks can earn stable interest or dividend income, but the vast majority of cryptocurrency holders have no cash flow returns other than potential price appreciation.
04 The Touchstone of Market Cycles
Whenever the market turns, we always see stories like ETHZilla's repeating. This inevitably reminds me of an old saying: 'Only when the tide goes out do you discover who's been swimming naked.'
The current market is at a critical turning point. Not only is ETHZilla starting to sell off, but MicroStrategy, which pioneered this model, also paused Bitcoin purchases this week and increased its cash reserves to $2.19 billion.
Data shows that Bitcoin has dropped about 30% since reaching an all-time high in early October, and MicroStrategy's stock price has plummeted over 50% during the same period. This correlation indicates a symbiotic relationship between publicly listed companies and the cryptocurrencies they hold; when one rises, the other rises, and when one suffers, the other suffers.
Interestingly, notable investors like Peter Thiel are associated with several companies holding crypto assets. When these smart money players begin to adjust their strategies, retail investors should be especially vigilant.
05 Insights for Ordinary Investors
In the face of ETHZilla's sell-off, how should ordinary investors respond?
Do not blindly trust the word 'strategy.' All actions of publicly listed companies ultimately serve the interests of shareholders; when cash flow tightens, even the most beautiful narratives will give way to real demands.
Pay attention to the company's cash flow and profitability. If a company primarily relies on external financing rather than business operations to sustain itself, then the cryptocurrencies it holds may just be 'paper wealth' that can be liquidated at any moment to meet urgent needs.
Understanding the importance of market cycles. When even publicly listed companies start 'selling coins to survive,' the market may have entered a more difficult phase. This is not just a choice of ETHZilla but an important cyclical signal.
The market is never short of stories, but it lacks the ability to continuously generate cash. ETHZilla's shift tells us that in the crypto world, surviving is more important than telling a good story. When leveraged players start robbing Peter to pay Paul, we may be standing at the starting point of a new phase.
Focus on @加密崎哥 #美联储回购协议计划 #ETH走势分析 $BTC
