Will ETHZilla’s $40M sell-off prove ‘bad’ for Ethereum’s rally?

ambcryptoPublished on 2025-10-27Last updated on 2025-10-28

Key Takeaways 

Why is ETHZilla dumping its ETH holdings? 

To boost its mNAV and reduce share dilution, according to the CEO.

Will it affect Ethereum’s value?

Yes, if other DATs with mNAV trading at a discount follow the same strategy.

The seventh-largest Ethereum [ETH] DAT (digital asset treasury) firm, ETHZilla Corporation (ETHZ), announced that it sold $40 million worth of ETH to fund share buybacks. 

McAndrew Rudisill, CEO of ETHZilla, said the move would help reduce share dilution and shore up mNAV. 

“By opportunistically repurchasing shares while our stock is trading below NAV, we plan to reduce the number of shares that are available for stock loan/borrow activity, while increasing the NAV per share of the Company.” 

Ethereum

Source: X

The firm added that it has a $250 million share buyback program that will be funded by selling its ETH holdings.

Following the update, ETHZ, rallied 14.5% after the update and closed on the 27th of October at $20.65. After market hours, it rose by another 14% to $ 23.50. 

Is the DAT sell-off bad for ETH?

However, the selling of the underlying ETH to fund share buybacks could be a risk to the altcoin. The trend would be “bad for coin,” claimed Charles Edwards, Founder of crypto VC Capriole Investments.

Ethereum

Source:X

He noted that DATs trading below mNAV typically have two other options — securing buyouts from peers or increasing debt.

The mNAV or Market-to-Net-Asset-Value ratio allows DATs to raise capital and buy more ETH if it trades at a premium. 

But if the mNAV is at a discount, like most DATs are at the moment (including ETHZilla), it would hamper funding and extra ETH bids.  

Ethereum

Source: Blockworks

At press time, Bit Digital [BTBT] had an mNAV of 2. Bitmine [BMNR] and GameSquare (GAME) had a reading of 1, while the rest were below 1. 

In other words, if most of the ETH DATs were to go to the ETHZilla way in the short term, the sell pressure would cap ETH’s price action. 

The DATs control 5% of the ETH supply (about 6 million ETH) while ETFs hold 5.6%. Unless ETFs absorb the sell-off, a wide DAT distress could drag the market. 

ETH price stalls at $4.2k

That said, after recovering about 12% from $3.7k last week, bulls were rebuffed at $4.2k.

The $4.2k has become a short-term supply zone and must be cleared for a meaningful advance to $4.8k or else the $3.8k support could be retested. 

Ethereum

Source: ETH/USDT, TradingView 

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