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Cryptocurrency reserve companies (DAT) have historically accumulated crypto assets and pledged to avoid selling. Their narrative revolves around amassing more cryptocurrency, leveraging equity offerings for borrowing, and using acquired cash to expand reserves. However, this cycle seems to be breaking.
Ethereum Breaking News
The idea of reserve companies starting to sell their cryptocurrencies sounds alarming. Saylor amassed a reserve worth tens of billions without selling any BTC, and other companies aim to replicate this. The steps include acquiring cryptocurrency through borrowing, boosting share value, issuing more shares, purchasing more cryptocurrency with the cash obtained, increasing company value, and repeating the cycle as cryptocurrency prices and share issues rise.
However, ETHZilla recently announced selling $40 million worth of ETH to fund share buybacks, contrary to Saylor’s strategy. In a last-minute announcement, the company stated that since the sale on October 24, 2025, they have repurchased approximately 600,000 common shares for about $12 million under a $250 million share buyback program approved by the current board. ETHZilla plans to use the remaining proceeds from the ETH sale for additional buybacks, intending to continue selling ETH until the discount in NAV normalizes.
ETHZilla’s chairman and CEO, McAndrew Rudisill, said, “We are leveraging the strength of our balance sheet, including reducing our ETH holdings, to execute share buybacks. While our shares trade at a significant discount to NAV, we expect the cash from the ETH sales will immediately enhance value through these buybacks.
By seizing opportunities to conduct share buybacks while our stocks trade below NAV, we plan to increase the company’s per-share NAV, reducing the number of shares available for lending/borrowing activities.”
Bearish Signal
The company continues to hold $400 million in ETH, but the per-share ETH value remains below the target. This sale by ETHZilla provides a projection of potential insolvency for crypto reserve companies, challenging the perpetual cryptocurrency accumulation narrative and offering insights into how new bear markets may begin. When this happens, I’ll recall this last-minute development on October 27 as the first significant signal.
