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Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it”. For SharpLink Gaming, it didn’t even take that long. What started as a bold crypto play quickly spiraled into a market mess, triggered not by bad tech or fraud, but by timing, tactics, and a brutal force of sell pressure.
One SEC filing lit the match. PIPE terms poured the gasoline. And boom! SharpLink Gaming is on fire. And just before anyone could say “Ethereum,” the stock went from a 400% rocket to a 70% decline.
So, let’s talk about how SharpLink Gaming’s treasury flex turned into a cautionary tale for corporate crypto adoption, starting with the shelf registration that broke the trust. Please read on.
SharpLink Gaming hit the gas on June 12, 2025, filing an S-3 automatic shelf registration as a “Well-Known Seasoned Issuer” (aka WKSI, the big leagues). This move let PIPE investors resell tens of millions of shares at will. No sale yet, just the paperwork. But that was enough to freak out the market. Nearly 58.7M PIPE shares suddenly became tradable. The filing triggered panic, and so, shares plunged ~70% as investors feared a flood of supply.
In late May, SharpLink Gaming raised about $425 M via a private placement (PIPE) to buy ETH. About 69.1 M new shares were sold at $6.15 each (some insiders at $6.72) to crypto investors like ConsenSys, Galaxy, ParaFi, etc. Those investors secured registration rights, meaning SharpLink Gaming agreed to promptly file to allow resale. Once the shelf went live, lock-ups were toast, and suddenly, insiders and VCs could head for the exit. And many did. Their rush to sell slammed demand, while prices followed.
Alongside the PIPE, SharpLink Gaming had an approved ATM stock program of $1 billion (SEC-filed May 30). In practice, SharpLink Gaming used this facility to sell about $79 M of stock from May 30–June 12. Crucially, many ATM sales windows coincided with waning prices. As ETH fell and SBET declined, the SharpLink Gaming company dumped shares via ATM, adding supply into a sinking market. The combined timing of PIPE resales and ATM share sales amplified the selloff, setting off stop-losses and deepening each price drop.
On June 13, 2025, SharpLink Gaming snapped up 176,270.69 ETH for about $462.95 million (fees included), at roughly $2,626 each. Funded by PIPE cash and $79 M from ATM sales, this move made SharpLink Gaming the biggest public ETH holder. CEO Rob Phythian called it “landmark”, but the timing stung.
“This is a landmark moment for SharpLink and for public company adoption of digital assets,” — Rob Phythian, Chief Executive Officer of SharpLink Gaming
In practice, market prices were lower. On June 13, ETH traded roughly in the $2,530–2,560 range (CoinDesk noted a $2,536 close). Paying $2,626 means SharpLink Gaming paid about 3–4% above mid-market prices. On a $463 M buy, that premium and fees likely baked in a $15–20 million instant paper loss.
SharpLink Gaming is all-in ETH bet shows on‑balance-sheet crypto risk. Putting nearly every dollar into ETH with no hedges left them naked to volatility. Smarter play? Mix in stablecoins or cash and execution tactics to limit slippage. For example, using dollar-cost averaging or liquidity-aware trading could avoid “buying the top.” In hindsight, carving out part of the funds into USDC or yield-bearing stablecoins, or adding risk controls like covered-call overlays or stop-loss levels could’ve softened the blow. SharpLink Gaming’s episode is a reminder that treasury crypto bets should be managed carefully, with explicit hedges and buffers. Otherwise, what felt like a power move can quickly feel like a faceplant.
SBET’s chart didn’t just crack, it snapped like a cheap selfie stick under pressure. On May 27, right after the treasury news dropped, volume exploded to ~54M shares and the stock flew 433% in a single day. But fast forward to June 13, volume swelled to ~24.8M, as the stock collapsed 67% to $10.69. Support levels shattered fast (e.g. June 9 closed ~$29.43), each drop pushing the fall further. The volume-weighted average price (VWAP) flipped bearish: SBET started closing well below the intraday VWAP in mid-June, a clear sign of capitulation. The chart’s RSI also dropped from extreme highs to deep oversold levels, screaming one thing, “the party is over”.
As the crash deepened, price behavior broke from expected support patterns. SBET consistently closed below its VWAP, a bearish sign. This gap between price and VWAP is a classic capitulation signal. At the same time, the RSI kept sliding into oversold territory, confirming momentum had fully collapsed. In short, the indicators were aligned: moving averages broke down, VWAP was breached, and RSI showed no buying strength was left.
Once key chart support broke, automated stop-losses and trading algorithms likely made things worse. Each time a major price level fell, preset sell orders kicked in, and algorithmic systems (using VWAP or trend filters) triggered exits. The result? A self-reinforcing drop: The panic fed triggers, and the triggers fed more panic. That feedback loop, common in volatile names, drove the crash beyond what any news alone could explain.
Don’t bet the farm on one wild token. Treasurers usually spread reserves across T-bills, cash, short bonds, stablecoins, and some crypto. ETH can join the party, but in small doses. As one treasury analysis notes, a diversified portfolio “reduces exposure to market risks” and helps maintain liquidity during stress.
Companies should always stash liquid assets for bills and surprises. Best practice is to hold a cash buffer or stable-value assets (like USDC or cash equivalents) to cover operations. Stablecoins in particular allow firms to park funds in crypto rails without full crypto volatility. SharpLink Gaming’s strategy left it with little dry powder once ETH plunged. In contrast, holding even a portion in stablecoins or high-grade short-term instruments would have provided breathing room and avoided panic sells.
Finally, corporate treasuries should employ hedges and stop-loss strategies. This can include using futures, options or covered-call structures to cap downside, and setting explicit sell thresholds. In practice, a treasury might sell call options on crypto holdings to earn a premium (partially offsetting dips), or ladder buys over time. Crucially, risk limits or automated stop orders can prevent a single asset move from wiping out reserves. SharpLink Gaming’s case, with no stop-loss in place, shows the danger of neglecting these controls. Applying basic hedging and strict limits is essential to preserve capital in volatile markets.
MicroStrategy famously executed phased BTC buys, raising over $700 million through ATM sales and debt to accumulate a huge number of BTC. In contrast, SharpLink Gaming went all-in with one giant ETH haul, ate slippage, and paid ~4% above mid-market price on June 13, 2025. A comparable misstep occurred at Celsius Network (CEL), where over-leveraged asset deployments forced a bankruptcy in mid-2022 after double-digit losses in ETH and BTC positions. Both cases highlight critical lessons: prudent timing, phased scaling, and transparent governance protect corporate treasuries during volatile market entry.
The lesson to take from the experience of SharpLink Gaming is that: Bold bets need brakes. Without smart exits, hedges, or timing, even a headline-grabbing move can spiral fast to ruin. Crypto is wild, but treasury strategy shouldn’t be. Thank you for reading at The Bit Gazette today.
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