ETH reserve companies started regular accumulation around June, and then ETH reached its new record. Although this was a good thing, the change in general market sentiment prevented them from growing as comfortably as Strategy. The mNAV problem we warned about with ETHZilla is now emerging in another company.
ETH Reserve Companies Sell
As if the sales of whales and short-term investors were not enough, now reserve companies have started selling. ETHZilla He had to sell ETH to buy back shares. The recent filing shows that FG Nexus had to sell 10,922 ETH to buy back shares. The company has 40,005 ETH left and the reserve is shrinking instead of growing.
What’s the reason? If the underlying asset (here ETH) performs negatively and puts the reserve company at a loss, mNAV could fall below 1 or even worse. In order to preserve the value of its shares, the company must therefore sell the underlying asset to buy back shares at a relatively low price. What is sold here is ETH. Strategy Since it has been in this business since 2020, its borrowings are long-term and its costs remain low, it has not experienced such problems so far. However, new companies that follow in his footsteps are not so lucky.
13th largest ETH reserve company This sale shows that market weakness may force reserve companies to sell more. Before the sale, his company had 50.77K Ether. At the time of writing, US stock markets opened positively as expected. The employment report helps boost the possibility of interest rate cuts.
