The recent complete divestment of Peter Thiel and Founders Fund from ETHZilla marks a critical juncture for the crypto-treasury company and the broader sector it represents. Confirmed by a February 2026 filing, the move signifies a definitive exit from a venture that aimed to bring Ethereum exposure to public markets, mirroring the successful strategy of MicroStrategy with Bitcoin. Thiel's withdrawal follows a significant reduction in his stake since August 2025, culminating in a 0.0% beneficial ownership and underscoring a rapid shift in sentiment.
ETHZilla's Tumultuous Journey and Financial Pressures
ETHZilla, designed to bottle the "Strategy playbook" for Ethereum, has faced severe headwinds since Thiel's initial investments. Its shares have plummeted by an alarming 95% since August 2025, falling from approximately $74 to just over $3.50. This drastic decline coincides with the company's struggle to maintain its "pure treasury posture." Faced with debt pressure and operational needs, ETHZilla executed substantial ETH sales, including a $74.5 million sale and a more recent $12.58 million sale. Furthermore, the company redeemed over $500 million in senior secured convertible notes, incurring a significant premium, signaling the high cost of capital in the current market. These actions reveal a company under immense pressure, forced to liquidate its core asset to manage liabilities, moving away from its initial value proposition.
Macro Headwinds and the Future of Crypto-Treasury Models
Thiel's exit and ETHZilla's struggles are not isolated incidents but reflect a broader challenge confronting crypto-treasury firms. The once-favorable "premium loop," where equity traded above underlying crypto assets, has largely dissipated. Currently, the macro environment presents significant obstacles: thin carry from ETH staking yields and derivatives, coupled with elevated financing costs, makes the treasury strategy inherently less appealing and more challenging to execute profitably. For investors, three potential paths lie ahead for companies like ETHZilla: a "premium loop reopening" driven by market stabilization, a "discount trap" where equity consistently trades below asset value, necessitating continuous asset sales, or a "reflexive unwind" marked by sharp crypto drawdowns and forced liquidations. Key indicators to watch include the company's ETH balance, capital structure (especially financing terms), strategic diversification efforts, and crucial macro dials like futures basis and staking yields, which will ultimately dictate the viability of these public market crypto vehicles.
