ETHZilla, backed by Peter Thiel, announced a $250 million buyback plan, but the stock unexpectedly faced a big dump.

The cryptocurrency financial company ETHZilla Corporation (NASDAQ: ETHZ), co-founded by PayPal founder and billionaire investor Peter Thiel, announced a stock buyback plan of up to $250 million on August 25, which was initially seen as significant Favourable Information. However, the market reaction was unexpected — after briefly surging to $3.75, the stock price quickly reversed, falling over 16%. This sudden change has sparked investor follow: is it a market profit-taking, or do ETH-related assets face deeper pressures?

Details of the $250 million buyback plan

(Source: ETHZilla)

ETHZilla stated that the buyback plan will expire on June 30, 2026, during which it will repurchase up to $250 million worth of common stock, with funding sources including company operating funds, ATM issuance, and future financing.

Chairman McAndrew Rudisill emphasized that the active buyback at the current stock price level highlights the company's commitment to creating long-term value for shareholders.

Currently, ETHZilla holds 102,237 ETH (valued at approximately 489 million USD) and plans to invest the newly purchased ETH into Electric Capital's proprietary protocol to generate returns.

Transitioning from biotechnology to a crypto finance company

ETHZilla, formerly known as 180 Life Sciences Corp, officially transformed into an Ethereum asset management company after receiving approximately $425 million in private investment at the end of July.

The company has attracted several well-known investors, including Peter Thiel (holding 7.5%), Cathie Wood, and Tom Lee. The market generally compares it to the Bitcoin financial company Strategy (MSTR), viewing it as the "Ethereum version of MSTR."

Why did the favourable information turn into bad news?

Although share buyback plans are generally seen as a signal of stock price support, the timing of the announcement by ETHZilla coincided with ETH's rapid decline after reaching a historical high of $4,953.73 on August 24, leading to a sharp turn in market sentiment.

Pre-market trend: ETHZilla rose by 3.33% against the market at one point, but quickly turned to a fall.

Peer Performance:

BitMine Immersion Technologies (BMNR): holds 1,523,373 ETH, stock price fell 6.13%.

Sharplink Gaming (SBET): Holds 740,760 ETH, fall 4.70%.

Bit Digital (BTBT): Holds 120,306 ETH, fall 3.13%.

This reflects that ETH failed to hold its high position, leading to a wave of profit-taking in overall ETH asset stocks.

ETH Market Background: High Position Fall and Institutional Trends

After ETH broke its historical high, the price adjusted in sync due to Bitcoin (BTC) falling from $114,000 to $110,000.

However, SoSoValue data shows that the spot ETF related to ETH has recorded net inflows for five consecutive months, indicating strong institutional interest in ETH remains robust for the long term.

Federal Reserve Chairman Powell sent dovish signals at the Jackson Hole meeting, with the market expecting a 75% chance of a rate cut in September, providing medium-term support for the crypto market.

Conclusion

ETHZilla's $250 million buyback plan was originally expected to act as a catalyst for its stock price, but the short-term effect has been weakened against the backdrop of ETH's pullback from its highs and market profit-taking. In the long run, if ETH can return to an upward trend, ETHZilla, as a "Ethereum Asset Leveraged Stock", still has explosive potential. However, investors need to be cautious of the amplifying effect of ETH's volatility on stock prices and closely follow the flow of institutional funds and changes in macro policies.