Peter Thiel Backed ETHZilla At $107 And Got Out Now At $3: What Went Wrong?

Billionaire Peter Thiel and Founders Fund fully exited ETHZilla (NASDAQ:ETHZ) after riding shares from $107 in August to $3—a 97% collapse that turned a high-profile Ethereum (CRYPTO: ETH) treasury play into a cautionary tale.

The Spectacular Collapse

Thiel and Founders Fund acquired a 7.5% stake in August 2025 when ETHZilla pivoted from biotech firm 180 Life Sciences to an Ethereum treasury company. 

The news sent shares surging 90% in a single session to over $107.

The timing couldn’t have been worse. ETHZilla launched its Ethereum treasury strategy on August 18 following a $565 million capital raise from over 60 investors including Electric Capital, Polychain Capital, and GSR. 

At its peak, the company held over 100,000 ETH tokens.

Then the crash hit. When crypto markets collapsed in October, ETHZilla was among the first to sell. 

In late October, it dumped approximately $40 million in ETH to fund stock repurchases. In December, it sold another 24,291 ETH worth $74.5 million to pay down senior secured convertible notes.

The Business Model Failure

ETHZilla aimed to become a “premier Ethereum-focused accumulation vehicle” providing public market access to ETH while earning staking yields. 

The model copied Michael Saylor’s Strategy (NASDAQ:MSTR) playbook—raise capital through stocks and bonds to buy crypto.

However, the model requires rising prices. With ETH down nearly 60% from 2025 peaks, treasury companies face mounting pressure. 

Unlike Strategy, which continues buying Bitcoin regardless of price, ETHZilla capitulated and sold.

Now the company is pivoting again—this time to real-world asset tokenization. 

In February, ETHZilla acquired 95 manufactured and modular home loans for $4.7 million to tokenize on Ethereum Layer 2. It also purchased two CFM56-7B24 aircraft engines for tokenization through Liquidity.io.

The Current Holdings

ETHZilla ranks as the sixth-largest corporate Ethereum holder with 69,802 ETH valued at approximately $139 million. 

This trails far behind leader BitMine Immersion Technologies (NASDAQ:BMNR), which holds 4,371,497 ETH valued at $8.7 billion.

The company said its future value would be “driven by revenue and cash flow growth from our RWA tokenization business”—a dramatic shift from its original Ethereum accumulation thesis.

ETHZ Price Update

ETHZ is consolidating in a tight range between $2.50 and $5.

The Bollinger Bands show extreme compression—upper band at $5.64, middle at $4.10, lower at $2.57. This typically precedes significant volatility.

The RSI at 33.78 sits in oversold territory, suggesting selling pressure dominates but may be exhausting. 

Critical support is $2.5-$3. Breaking below triggers selling toward $2. Breaking above $4.10 signals upside.

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