The first signs of a potential unwind in digital asset treasuries emerged this week as two firms appeared to sell part of their holdings.
Two digital asset treasury (DAT) companies moved to cash out part of their crypto holdings this week, after months of non-stop accumulation across the emerging DAT sector. The moves triggered speculation that corporate crypto treasuries may be starting an early-stage, but long-predicted unwind.
Ethereum treasury company ETHZilla said in a Oct. 27 press release that it had sold roughly $40 million of ETH and used proceeds to repurchase about 600,000 of its shares for roughly $12 million under a previously authorized $250 million buyback program. The firm currently holds over 102,000 ETH in its reserve, placing it in the top-five publicly traded ETH holders, per data from CoinGecko.
Also this week, on-chain data shows that Sequans, a Bitcoin treasury firm holding 3,205 BTC, moved nearly 1,000 BTC to an address that appears to be a hot wallet on Coinbase Prime.
ETHZilla said in the release that the firm “intends to continue to sell ETH to repurchase its shares until the discount to NAV is normalized,” while retaining about $400 million of ETH for future initiatives.
According to ETHZilla’s website, the company’s mNAV — a ratio of the firm’s market capitalization to the dollar value of its crypto holdings — was standing at 0.62 as of Oct. 23, which means its stock was trading at a substantial discount to the underlying value of its holdings. Following the sale, ETHZilla’s shares on Nasdaq jumped 5.42%, per data from Google Finance.
Sequans, on the other hand, has yet to confirm its Bitcoin sale. Blockchain analyst Emmett Gallic reported in an X post on Oct. 28 that Sequans moved 970 BTC to an address on Coinbase Prime that he says “is usually used for sales.”
If confirmed, it would be Sequans’ first significant BTC sale since launching its treasury strategy. Sequans’ shares amid the report jumped 4.68%. As of press time, Sequans’ website shows that the company’s mNAV metric stands at around 0.74. Per CoinGecko, the firm is currently ranked as the 34th-largest Bitcoin DAT.
The Defiant reached out to Sequans for comment on the transaction, but hasn’t heard back by press time.
The moves have sparked mixed reactions on X. Some argue that selling crypto to fund share buybacks isn’t acceptable for a digital asset treasury entity, suggesting the companies could instead borrow against cryptocurrency or raise more capital. Others noted that crypto sales and buybacks should be considered when the firm’s mNAV turns negative.
In early August, Galaxy Digital warned in a research note that the rapid, one-directional growth of digital asset treasury companies could make markets “structurally fragile,” adding that coordinated sales or a collapse in the equity premium could trigger cascading liquidations, comparing it to the 1920s investment trust boom.
