Treasury Firm Sells Ethereum as Stock Prices Plunge
The digital asset treasury firm FG Nexus (FGNX) has recently undertaken significant actions amid a challenging market environment. As stock prices continue to decline, many firms in the sector are now selling cryptocurrencies to fund share buybacks.
Treasury Firms Selling Ethereum as Stock Prices Fall
FG Nexus made headlines on Thursday when it announced the sale of part of its Ethereum holdings. The firm sold approximately 10,922 ETH, valued at nearly $33 million, to finance the repurchase of its shares.
Details of the Share Buyback
In addition to the proceeds from the Ethereum sale, FG Nexus utilized $10 million in borrowed funds to execute its buyback strategy. The firm repurchased 3.4 million shares, representing about 8% of its outstanding float, at an average price of $3.45 per share. This price is significantly lower than the reported net asset value (NAV) of $3.94 per share.
- Ethereum Sold: 10,922 ETH
- Proceeds from Sale: Approximately $33 million
- Borrowed Funds Used: $10 million
- Shares Repurchased: 3.4 million
- Average Repurchase Price: $3.45
- Reported NAV: $3.94
Impact on Cryptocurrency Prices
The announcement had an immediate effect on cryptocurrency markets. Ethereum’s price dipped by about 2% following the news, while Bitcoin experienced a slight decline of around 1%. However, both cryptocurrencies managed to regain some value after the initial drop.
Current Holdings and Market Conditions
FG Nexus now retains approximately 40,000 ETH and holds $37 million in cash and USDC stablecoin. The firm’s actions highlight the increasing strain on digital asset treasury firms, many of which are seeing their stock prices plummet below the net asset value of their cryptocurrency holdings.
Another firm, ETHZilla, also sold around $40 million in tokens last month for share repurchases, signifying a trend among treasury firms facing similar challenges. This raises concerns about the sustainability of operations for these companies as they liquidate core assets.
FG Nexus Chairman and CEO Kyle Cerminara stated, “We plan to continue buying back shares while our stock trades below NAV.” He emphasized that this strategy aims to enhance the per-share valuation metrics as the number of outstanding shares decreases, leading to an increased net asset value per share.
Despite a slight uptick in FG Nexus shares following the news, the stock remains over 95% lower compared to its peak last summer. The ongoing strategies of treasury firms will be closely monitored as they navigate the current economic climate.
