Shares of Sharplink (SBET) experienced a significant drop of 11% following the company’s announcement regarding its plans to stake a portion of its substantial Ethereum (ETH) holdings on Linea once the mainnet goes live. Currently, SBET shares are trading at $15.73, reflecting a decline compared to their price five trading days ago.
The sentiment among users on Myriad, a prediction market operated by DASTAN, is notably pessimistic, with 82.5% of participants doubting that Sharplink will achieve its ambitious target of one million ETH by September 16. The company currently holds 837,230 ETH in its treasury, valued at approximately $3.62 billion based on current market prices. Earlier in the month, confidence in Sharplink’s ability to reach its goal diminished, with 70% of prediction market users initially doubting the milestone, which has since escalated.
Analysts suggest that the decline in share price and increasing public skepticism may be linked to Sharplink’s strategy of aggressive share issuances to raise funds for ETH acquisitions. Samantha Bohbot, chief growth officer at RockawayX, pointed out that this practice dilutes the value of existing shares, making the stock less appealing to current investors. The equity financing model necessitates issuing new shares, which dilutes the ownership of those who already hold SBET.
Bohbot further explained the current dynamic among digital asset treasury investors, asserting that many appear more inclined towards short-term trading rather than long-term investment. The focus tends to be on the premiums of public digital asset treasury shares versus their underlying crypto assets, rather than on the ability to generate yield through sustained holdings.
While there is skepticism about Sharplink’s current moves, Bohbot believes that the situation is a long-term play, which may change over time. She anticipates that the market will eventually differentiate between Digital Asset Treasuries (DATs) that can provide attractive yields and those that cannot, which might lead to a decline in valuation for the latter.
It’s also notable that Sharplink already has a staking operation in place on the Ethereum mainnet, where it has accrued 2,318 ETH—approximately $10 million at current prices—in rewards since June. Transitioning some of its ETH holdings to Consensys’s layer-2 network, Linea, may be more critical for Linea stakeholders than for current SBET investors.
Potential investors are weighing additional considerations, as highlighted by James Harris, the CEO of Tesseract, an institutional digital asset firm. He noted that because Linea is still relatively new and untested, there are inherent risks—such as those related to smart contracts—that do not accompany more established custodial staking options, despite the backing of Consensys.
Consensys, a key player in Ethereum development, has been pivotal to Sharplink’s ETH treasury since its inception in May, participating in a $425 million private investment round. As part of this collaboration, Joseph Lubin, the co-founder of Ethereum, became the chairman of SBET’s board. Given this connection, expectations for Sharplink’s staking initiative on Linea have been building, although concerns remain due to the lack of clarity around yield terms and liquidity mechanics, complicating risk assessments for investors.
