Peter Thiel-Backed Crypto Stocks: Navigating a Bearish Market Amid Sector-Wide Selloff

The crypto sector in 2025 has been defined by volatility, with a confluence of macroeconomic headwinds and structural liquidity challenges triggering a sharp selloff. Amid this turmoil, Peter Thiel-backed companies like Bullish (BLSH) and ETHZilla (ETHZ) have emerged as case studies in resilience and fragility. This analysis evaluates their performance against the backdrop of a bearish market, focusing on Bullish's Q3 2025 financial results, ETHZilla's buyback strategy, and the broader sector dynamics shaping crypto-treasury stock investments.

Bullish's Q3 Surge: Profitability Amid Crypto's Winter

Bullish, a crypto trading platform backed by Thiel, reported record financial results for Q3 2025, with adjusted revenue hitting $76.5 million and adjusted EBITDA reaching $28.6 million-a stark contrast to its $67.3 million net loss in the same period in 2024. The company's pivot to crypto options trading, which surpassed $1 billion in volume, and its expansion into U.S. spot trading following NY BitLicense approval, drove this turnaround. Despite these operational successes, Bullish's stock has underperformed, declining over 43% year-to-date and 26.7% in the past month.

This disconnect between financial performance and stock price reflects broader market skepticism toward crypto-treasury stocks. While Bullish's profitability is a positive signal, the sector's pro-cyclical liquidity challenges-exacerbated by thinning order books and a lack of two-sided trading flow-have amplified volatility. For instance, the October 10 flash crash, which saw $19 billion in crypto futures liquidations, created a psychological barrier for investors, even for firms with strong fundamentals.

ETHZilla's Buyback Gambit: A Defense Against Dilution?

ETHZilla, another Thiel-backed firm, announced a $250 million stock repurchase program in August 2025, funded by $40 million in ETH sales and $215 million in cash reserves. By October, the company had repurchased 600,000 shares for $12 million, yet its stock plummeted over 53% in a single week amid concerns about dilution following a large share issuance filing according to Nasdaq. The initial 3.8% drop post-announcement further underscored market uncertainty about the program's efficacy according to Yahoo Finance.

ETHZilla's treasury holdings-102,237 ETH ($489 million) and $215 million in cash-suggest a strong balance sheet, but its strategy to stake ETH for yield via Electric Capital's protocol highlights the sector's shift toward income generation amid falling asset prices. However, the company's volatility mirrors the broader crypto-treasury sector's struggles. As BlackRock noted, many digital asset treasuries (DATs) have traded near or below net asset value (NAV), removing a key source of buying pressure.

Sector-Wide Selloff: Macro Factors and Structural Weaknesses

The 2025 crypto selloff was driven by a mix of macroeconomic and structural factors. Shifts in Federal Reserve policy, unwinding leverage, and whale-driven portfolio rebalancing created a perfect storm. Additionally, rising real yields linked to delayed rate-cut expectations heightened sensitivity to USD-denominated assets like Bitcoin, amplifying downward pressure.

Investor sentiment turned sharply negative in October after hawkish comments from the Bank of Japan triggered a global "risk-off" environment. The October 10 flash crash became a psychological turning point, with self-reinforcing cycles of liquidations and falling prices eroding confidence. Stablecoin outflows and negative ETF flows further signaled capital flight from the ecosystem.

Thiel's Strategic Moves: Diversification Amid Uncertainty

Thiel's hedge fund, Thiel Macro, has also adjusted its strategy in response to market conditions. The fund sold its $100 million stake in Nvidia in Q3 2025, netting a profit amid concerns about an AI bubble. This move aligns with a broader trend of divesting from high-growth tech stocks, even as Bullish's Q3 results showed a 35% increase in trading volume.

While Bullish's profitability and ETHZilla's buyback program demonstrate operational resilience, their stock performance underscores the sector's overexposure to crypto volatility. For instance, Bullish's 10% post-earnings drop highlights the fragility of investor sentiment, even for firms with strong fundamentals.

Conclusion: Attractive or Overexposed?

The viability of Thiel-backed crypto-treasury stocks in a bearish environment hinges on two factors: operational resilience and market sentiment. Bullish's Q3 results suggest a path to long-term sustainability, but its stock remains vulnerable to macroeconomic headwinds. ETHZilla's buyback program, while well-capitalized, has yet to reverse its downward trajectory, reflecting the sector's structural liquidity challenges.

For investors, the key question is whether these firms can decouple from crypto's volatility through diversification or yield-generating strategies. Bullish's expansion into U.S. spot trading and ETHZilla's staking initiatives are steps in this direction, but the broader sector's reliance on NAV-driven buying pressure remains a risk. In a market defined by thin order books and self-reinforcing selloffs, even well-managed crypto-treasury stocks may struggle to attract capital until macroeconomic conditions stabilize.