Sharplink Gaming stocks dip as it becomes top corporate ETH holder

Sharplink Gaming (SBET) became the largest corporate holder of ETH after completing a financing round, followed by a direct purchase. Sharplink dedicated over $463M for ETH purchases, with the goal of setting up a long-term treasury strategy.

Sharplink Gaming (SBET) is the biggest corporate holder of Ethereum, after a financing round to acquire an ETH treasury. Sharplink raised $463M to acquire a total of 176,271 ETH, becoming the biggest ETH buyer as a crypto outsider. The company bought ETH at an average price of $2,626, already suffering from the recent slide to a lower range. 

The recent purchase has the potential to become the “Microstrategy moment” for Sharplink, although it is tapping the new trend of ETH and altcoin treasuries. Sharplink already announced its plans to raise up to $1B for its eventual treasury, so it has more leeway for future acquisitions. 

Sharplink Gaming joined the trend of tapping altcoins as reserves, joining DeFi Dev Corp with its SOL strategy and other corporate buyers looking into SOL, XPR, or other assets. Sharplink is the first NASDAQ-listed company to adopt an ETH treasury strategy, with more potential buyers expected.

Sharplink shares crash despite ETH treasury hype

Despite the announcement, both ETH and the SBET market price showed weakness. ETH traded in the $2,500 range after a market-wide slump. SBET erased its recent gains, sliding by 66% in pre-market hours. 

Just weeks ago, SBET traded above $124, ending up with a 91% crash since its all-time peak. SBET may have already speed-ran its Strategy moment, as crypto buying is no longer the guaranteed booster for stock prices. 

SBET shares crashed in pre-market trading, erasing 91% from their all-time high above $124. | Source: Marketwatch

One of the main reasons may be the way Sharplink Gaming structured its financing. The first round of funds was raised through a Private Investment in Public Equity (PIPE), where private investors got shares at a potential discount. The subsequent dilution caused the private buyers to shed their SBET shares, crashing the price for retail holders. 

The fundraising round was led by Consensys and included a mix of fiat and direct ETH payments in exchange for SBET shares. Other participants included ParaFi Capital, Electric Capital, Pantera Capital, Arrington Capital, Galaxy Digital, Ondo, White Star Capital, GSR, Hivemind Capital, Hypersphere, Primitive Ventures, and Republic Digital. The high-profile fundraising initially boosted SBET, only later leading to the sharp price decline. 

ETH treasuries are in fact more common, a relic of the ICO era and early distribution. The Ethereum Foundation is currently the biggest holder, with $592.6M in ETH. Building a treasury through shares is one possible tool to use idle ETH, while tapping external share financing. For some companies, the SBET crash can be a warning about dilution. 

An ETH treasury can also be used for staking or other forms of passive income. SharpLink Gaming expressed its belief in the Ethereum ecosystem as a hub for finance, e-commerce or other applications. 

The recent stock crash may affect future attempts to expand the treasury. Currently, Sharplink holds an amount of ETH comparable to old ICO projects or investment funds. ETH is seen as a less reliable store of value, especially after its long slide against BTC.

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