Investors reassess ETHZilla stock as Founders Fund exits and treasury strategy unravels

Markets are reassessing risk after a sharp move in ETHZilla stock following the full exit of Peter Thiel’s venture firm from the troubled Ethereum-focused company.

Founders Fund exits and pre-market pressure on ETHZ

ETHZilla Corp (ETHZ) shares came under heavy pressure in pre-market trading on Wednesday, Feb 18, 2026, after a regulatory filing showed that Peter Thiel and his Founders Fund have completely liquidated their position. The stock dropped 5.13% in pre-market action to $3.33, as investors digested the implications of the exit.

The move follows a brutal slide in the stock, which has already fallen more than 97% from its 2025 highs. Moreover, the pre-market low of $3.33 underscored how quickly sentiment has reversed since last year, when Thiel’s participation was viewed as a key endorsement of the firm’s aggressive crypto strategy.

The sell-off was sparked by a late Tuesday SEC filing confirming that Thiel-linked entities now hold zero shares of the company. That filing marks a sharp reversal from August 2025, when Founders Fund disclosed a sizeable 7.5% stake, briefly boosting confidence in the long-term thesis.

From biotech pivot to stressed Ethereum balance sheet

Originally known as 180 Life Sciences, the company rebranded to ETHZilla in 2025, abandoning its biotech roots in favor of a high-leverage crypto play. At the time, the firm embraced a corporate Ethereum treasury strategy, positioning itself as an aggressive accumulator of Ethereum (ETH) on its balance sheet.

The pivot attracted more than $425 million in institutional backing, as investors sought exposure to a leveraged ETH balance sheet during the bull phase. However, the subsequent eth treasury liquidation and forced sales to meet debt obligations exposed the fragility of this approach, especially in a volatile market environment.

That said, the liquidation of much of its ETH reserve has left shareholders questioning the long-term viability of the firm’s ‘crypto-first’ capital structure. Many now see the collapse from 2025 highs to $3.33 as a case study in the risks of combining high leverage with concentrated digital asset exposure.

Why Thiel’s departure matters for ETHZilla stock

For many traders, the news that Founders Fund exits the name entirely is more than just a portfolio adjustment. It is interpreted as a symbolic end to the original thesis, in which a prominent Silicon Valley billionaire validated the Ethereum balance-sheet model. However, the departure also raises questions about whether other institutions might follow.

The loss of a 7.5% anchor investor removes a perceived backstop for the share price. Moreover, it undermines the narrative that a ‘Saylor-style’ accumulation of ETH, inspired by high-profile Bitcoin treasury strategies, can be easily replicated in the Ethereum ecosystem under the same leverage conditions.

ETHZilla’s renewed pivot toward tokenization and RWAs

In response to growing scrutiny, the company has tried to shift away from a pure crypto-treasury identity. One of its most notable ethzilla tokenization plans is the launch of “ETHZilla Aerospace”, a unit focused on tokenizing leased jet engines. This initiative aims to create on-chain exposure to aviation assets, potentially smoothing cash flows.

ETHZilla has also been on a mission to repair its balance sheet. In late 2025, the firm liquidated more than 24,000 ETH to repay convertible bond obligations, reducing immediate debt pressure but also shrinking its direct crypto holdings. Moreover, management has pursued acquisitions of modular home loan portfolios, targeting on-chain yields and positioning itself within the broader Real World Assets (RWA) narrative.

The real world asset pivot is designed to diversify revenue sources and reduce reliance on price appreciation in ETH alone. However, the timing of Thiel’s exit has overshadowed these efforts, reinforcing market doubts about whether the new focus can offset past leverage risks and severe equity dilution.

Structural questions for Ethereum treasury plays

The ETHZilla saga has intensified debate over the sustainability of corporate strategies built around heavy use of debt to accumulate crypto. While some Bitcoin treasury stories have retained investor enthusiasm, Ether-focused structures face higher skepticism, particularly when they depend on ongoing asset appreciation to service obligations.

That said, the reaction to the ethzilla stock drop suggests that public markets are now more willing to penalize firms that deploy extreme leverage in pursuit of digital asset exposure. Moreover, Thiel’s decision to exit at a steep drawdown may discourage new entrants from embracing similar Ethereum-centric balance sheet experiments.

Outlook after the Thiel exit

The latest developments leave the company at a crossroads, with its original high-octane treasury strategy largely unwound and investor confidence deeply shaken. Going forward, management’s ability to execute on tokenization and RWA initiatives will be critical to rebuilding trust and stabilizing cash flows.

For now, ETHZilla stock trades as a cautionary example of how quickly sentiment can flip when leverage, volatility and concentrated exposure collide. However, if the firm can prove its new asset-backed model is resilient, some investors may eventually revisit the story with a more cautious, fundamentals-first lens.