Peter Thiel’s Founders Fund Exits Crypto Hoarder ETHZilla as Market Shifts

Companies once celebrated in the capital markets for their aggressive cryptocurrency accumulation strategies are now finding themselves as assets investors are eager to offload. A prime example is ETHZilla, a firm that pivoted to an Ethereum reserve strategy, from which Silicon Valley titan Peter Thiel’s Founders Fund has completely divested, according to recent U.S. Securities and Exchange Commission (SEC) filings.

This significant move saw Founders Fund, co-founded by the PayPal visionary, liquidate its entire stake in ETHZilla by the end of last year. This comes just months after the fund held a substantial 7.5% share in the company as recently as August, illustrating a dramatic and rapid shift in investor sentiment.

The Meteoric Rise and Sudden Fall of a Crypto-Centric Strategy

ETHZilla’s journey began far from the crypto world, originally operating as the underperforming biotech stock 180 Life Sciences. However, sensing a burgeoning opportunity, the company made a bold strategic pivot, transforming into a crypto-hoarding entity focused on Ethereum. At its peak, ETHZilla amassed an impressive reserve of over 100,000 ETH.

Founders Fund’s initial disclosure of its significant holding in August coincided with ETHZilla’s stock price soaring, reaching an all-time high of nearly $107 per share. This period marked a fervent rush of “hot money” into so-called “crypto-hoarding stocks,” as numerous companies, inspired by the perceived success of pioneers like MicroStrategy, sought to leverage crypto narratives to inflate their valuations.

Yet, this speculative fervor proved fleeting. As the broader crypto market cooled and the speculative bubble began to deflate, many once-lauded crypto-centric companies quickly lost their appeal. ETHZilla was no exception to this downturn.

Facing immense pressure from convertible debt repayments, ETHZilla was forced to make a series of painful sales of its core asset. In October, the company offloaded $40 million worth of Ethereum, followed by a further $74.5 million sale in December. This desperate liquidation of its foundational assets to service debt obligations utterly eroded investor confidence.

By the market close on December 30th last year, ETHZilla’s stock price had plummeted to a mere $4.99, representing a staggering 95% drop from its summer peak.

From Crypto Hoarding to Real World Assets: ETHZilla’s Latest Reimagining

With its crypto-hoarding strategy thoroughly deflated and its financial position precarious, a beleaguered ETHZilla decided to embark on yet another dramatic transformation. In February of this year, the company announced the spin-off of a new business unit: “ETHZilla Aerospace.” This time, the focus has shifted entirely away from digital asset accumulation towards the burgeoning and increasingly popular field of “Real World Asset (RWA) tokenization.”

From biotech to an Ethereum hoarder, and now venturing into aerospace and RWA tokenization, ETHZilla’s tumultuous journey in the capital markets raises a critical question: will investors truly buy into this latest high-stakes gamble? Peter Thiel’s decisive and well-timed exit, liquidating his fund’s entire stake, perhaps offers the most candid answer to that very question.