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.” 

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.