XRP Ledger (XRPL) continues to shape the financial landscape as crypto firms shift toward on-chain asset management, but the latest developments at ETHZilla illustrate how investor uncertainty can overshadow even massive crypto holdings.

Investor Anxiety Looms Over Share Dilution

Despite boasting substantial ether reserves, shares of ETHZilla (ETHZ) nosedived by nearly 30% after it disclosed a new stock offering involving up to 74.8 million convertible shares. This move stoked widespread concern over dilution, whereby an influx of new shares can devalue existing ownership stakes without altering the company’s market capitalization.

According to its regulatory filing, ETHZilla’s total number of outstanding shares is set to jump approximately 46%, from 164.4 million to 239.3 million. Importantly, the company will not gain proceeds from this share sale, as holders are independently converting and selling their stock.

ETHZilla’s Strategic Shift to Digital Assets

Earlier in the month, ETHZilla rebranded from 180 Life Science — a biotech firm — into a cryptocurrency-centered treasury holding company. As part of this transition, it revealed a crypto war chest holding 82,186 ether, valued at roughly $349 million, in addition to $238 million in liquid assets. The average acquisition cost was $3,806.71 per ether. Upon this revelation, ETHZ stock surged, pushing year-to-date gains to nearly 80% before retracing on the latest announcement.

ETHZilla stock experienced a sharp reversal after dilution concerns despite holding a vast Ether treasury.

High-Profile Backing Signals Confidence in Ethereum

The pivot to blockchain has drawn attention from heavyweight investors. Venture capitalist Peter Thiel holds a 7.5% stake in ETHZilla via his Founders Fund, which also owns a 9.1% share in Bitmine Immersion Technologies. The latter recently secured $250 million to expand its ether reserves. These investments indicate a broader strategic belief that Ethereum could be the core infrastructure for future financial ecosystems.

Ethereum’s Market Rebound Bolsters Optimism

Following a sluggish 2024, Ethereum has outperformed major digital assets in 2025. Ether is up 38% year-to-date, well ahead of Bitcoin’s 24% and the broader CoinDesk 20 Index at 17%. The resurgence can be linked to growing regulatory clarity in the United States, which has paved the way for major financial institutions to build crypto solutions atop Ethereum.

Despite this bullish trend, ETHZ shares diverged from the market on Friday. Indices such as the Nasdaq, S&P 500, and Dow all posted gains following comments by Federal Reserve Chair Jerome Powell. Meanwhile, ether itself rose 9% within the same 24-hour window.

Ethereum leads crypto indexes in 2025, reinforcing its foundational role in decentralized finance.

Tension Between Treasury Strength and Shareholder Risk

The ETHZilla selloff illustrates a broader challenge: balancing macro-level potential with micro-level ownership risks. The company’s ether reserves position it among the largest publicly-held crypto treasuries. However, current and prospective shareholders remain wary of dilution, questioning whether the long-term promise of Ethereum-backed assets offsets the immediate impact on share value.

Related: XRP Price: $12M Max Pain for Bears

For ETHZilla and similar ventures leveraging the XRP Ledger or Ethereum for digital asset strategies, managing investor sentiment will be just as crucial as asset accumulation.