When Peter Thiel’s Founders Fund decides a crypto bet is no longer worth holding, the market pays attention.
But when it dumps its entire stake in a digital asset treasury company at a massive loss, the message changes.
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This isn’t a routine exit. It’s a verdict. According to a Schedule 13G filing with the SEC on Wednesday, Thiel’s Founders Fund has unloaded every single share it held in ETHZilla.
The exit is total. The timing is telling. And the message is unmistakable: the smart money is leaving the crypto treasury trade.
The brutal math of Thiel’s exit
The numbers paint a brutal picture. Founders Fund had accumulated approximately 2.4 million shares since 2024 at an average price of around $1.68 per share.
The stock now trades at roughly $0.27—a decline of more than 80% from Thiel’s cost basis and over 90% from its all-time highs. Portfolio rebalancing? Hardly. This is a fire sale.
What ETHZilla was selling
For the uninitiated, ETHZilla was a digital asset treasury company—a publicly traded entity whose primary business model involved holding Ethereum as a treasury reserve asset.
The thesis was straightforward: buy ETH, hold it on the balance sheet, watch it appreciate, and create shareholder value through crypto appreciation.
Crazy? Not at the time. When Ethereum was trading near $4,000, the math looked compelling.
Corporate treasuries were searching for yield, and crypto offered returns that traditional assets couldn’t match.
ETHZilla positioned itself as a pure-play vehicle for institutional investors who wanted crypto exposure without managing private keys.
When the model breaks
But then Ethereum fell. Hard. From its highs near $4,000, ETH has declined roughly 50% to its current level around $2,000.
And the digital asset treasury model—built on the assumption that crypto assets would appreciate—began to look less like innovation and more like a leveraged bet gone wrong.
The pivot that confirms the failure
Here’s the part that should worry anyone still holding digital asset treasury stocks: ETHZilla isn’t trying to fix its crypto treasury business. It’s pivoting away from it entirely.
In January, the company announced it was rebranding as Zilla Aerospace and shifting its focus to aerospace technology.
The company is now “pursuing opportunities in the aerospace sector,” effectively admitting that the digital asset treasury model isn’t working. Let that sink in.
A company whose entire value proposition was built on holding Ethereum is now trying to become an aerospace company. Strategic pivot? No. This is an escape plan.
Why Thiel’s exit matters for everyone
Peter Thiel isn’t just any investor. He’s a crypto OG. He co-founded PayPal. He was an early investor in Bitcoin.
His Founders Fund has backed some of the most successful crypto companies in the world. When Thiel makes a move, people notice.
And Thiel just made a very loud move. He didn’t trim his position. He didn’t hedge. He dumped everything.
At a massive loss. In a public filing that the entire market could see.
The behavior here doesn’t suggest an investor who thinks the crypto treasury model is temporarily out of favor. It suggests an investor who thinks the model is fundamentally broken.
The signal spreads
The implications extend far beyond ETHZilla. Thiel’s exit sends a signal to every other digital asset treasury company: the smart money is leaving.
If one of crypto’s most prominent institutional investors has lost confidence in the model, why should anyone else have confidence in it?
The question now is: who’s next? Strategy, the most prominent digital asset treasury company, has seen its stock decline significantly as Bitcoin has fallen from its highs.
Other companies that have adopted the crypto treasury model are facing similar pressure. If Thiel is selling, will other institutional holders follow?
The verdict on digital asset treasuries
Peter Thiel’s complete exit from ETHZilla signals something important: the digital asset treasury model is under serious strain.
The thesis that companies could create shareholder value by simply holding crypto assets on their balance sheets is being tested—and so far, it’s not passing.
This doesn’t mean the DAT model is dead.
If crypto prices recover, these companies could see their fortunes turn. But Thiel’s exit is a warning signal.
The smart money is cutting its losses. And in markets, it’s rarely a good idea to be the last one holding the bag.
Crypto market researcher and external contributor at Kriptoworld
Wheel. Steam engine. Bitcoin.
📅 Published: February 19, 2026 • 🕓 Last updated: February 19, 2026
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