Crypto treasury sell-offs intensify as firms liquidate Ethereum to support share buybacks amid sectoral crisis

FG Nexus has sold approximately $32.7 million worth of Ethereum to fund share buybacks amid a dramatic 94% decline in its stock over four months, exemplifying the growing net asset value (NAV) crisis faced by digital asset treasury (DAT) companies. This move follows a similar recent transaction by ETHZilla, which offloaded $40 million in Ethereum to support its stock repurchase program, highlighting a broader sectoral strain as firms seek to prop up equity prices trading significantly below their underlying crypto asset values.

FG Nexus disclosed selling 10,922 ETH in October as part of a $200 million buyback initiative designed to address the steep discount between its share price and NAV, which measures the per-share value of crypto holdings. The treasury firm used approximately $10 million in additional debt alongside the sale to repurchase 3.4 million shares at an average price of $3.45, below the then NAV of $3.94 per share. After these transactions, FG Nexus retained about 40,000 ETH and $37 million in cash and stablecoins, while total debt rose to $11.9 million. The buybacks represented 8% of the company’s outstanding shares, a sizeable effort to restore investor confidence.

Similar challenges are confronting ETHZilla, which announced the sale of roughly $40 million in Ethereum in late October to fund share repurchases under its $250 million buyback plan. Since then, it has bought back around 600,000 shares for about $12 million, with plans to continue selling Ethereum until its stock discount to NAV normalises. Despite these sales, ETHZilla still holds approximately $400 million in Ethereum reserves intended to support future strategic initiatives.

The forced selloff of crypto holdings by these treasuries exposes fundamental vulnerabilities in the corporate crypto treasury model, which expanded rapidly during the crypto price rally earlier in 2025. Across the sector, DAT companies managed over $42.7 billion in cryptocurrency assets throughout the year, with $22.6 billion amassed in the third quarter alone as Bitcoin surged past $126,000 in October. However, subsequent market reversals have exposed the risks of leveraged capital structures, including convertible notes, private investment in public equity (PIPE) deals, and perpetual preferred equity instruments, which amplify selling pressure when NAV discounts widen.

Market liquidity has also deteriorated severely. Bitcoin’s order book depth within a 1% price band dropped from $20 million to $14 million, a 33% decrease that renders the market more sensitive to sell-offs. Analysts warn that forced liquidation from treasury firms could range between $4 billion and $6 billion if 10% to 15% of their positions are sold, far exceeding the $2.33 billion exit from Bitcoin ETFs in November. This fire sale dynamic risks a feedback loop of price declines and further sales.

Other firms echo signs of stress. Metaplanet, a Bitcoin-focused treasury company, saw its market NAV fall below 1.0, triggering shareholder pressure. Its shares have lost 70% from June highs, reflecting widespread challenges. Smaller treasuries with concentrated bets on less liquid altcoins like Solana have experienced NAV drop-offs of over 40%, exacerbating sector fragility.

This reversal in corporate crypto demand marks a stark contrast to earlier in 2025 when treasury companies were seen as steady buyers fuelling crypto valuations. Now, with stocks deeply discounted to NAV and confidence waning, firms are compelled to monetise holdings to fund buybacks or bolster liquidity. MicroStrategy’s 60% stock decline amid Bitcoin price swings further illustrates the correlation risk between equity values and crypto markets, even for firms with robust balance sheets.

Retail investor behaviour compounds pressures as many exit positions preemptively, reducing market depth just as institutional holders begin liquidations. The resulting volatility recalls leverage-induced crashes from prior asset bubbles, such as the mortgage REIT crisis of 2008.

The crisis confronting digital asset treasury companies underscores the inherent risks in their leveraged, concentrated exposure to volatile crypto markets. Without rigorous risk management and possibly regulatory oversight, this cycle of forced liquidations could destabilise broader market confidence and crypto valuations. The coming weeks will be crucial in determining whether these firms can navigate the selloff without triggering systemic upheaval or if a fundamental restructuring of the corporate crypto treasury model is imminent.