The move to transfer 4.364 ETH by Sharplink: A test of trust with Ethereum investors

Q4 is gradually becoming a severe test for the (Digital Asset Trusts – DAT) associated with Ethereum (ETH).

After an impressive breakthrough of 71.26% in Q3, Sharplink Gaming (SBET) quickly erased about 40% of that gain — even though the new quarter has not yet reached halfway. In other words, the “top-buying” investors from the last quarter's surge are now deeply in losses.

It is worth noting that SBET is not an isolated case.

The largest DAT fund related to ETH — BitMine (BMNR) — has accumulated approximately 442,000 ETH since the mid-October correction. However, according to data from CryptoQuant, this holding is currently facing an unrealized loss of up to 2.1 billion USD.

Source: TradingView (SBET/USD)In that context, the media's “exaggeration” of the story surrounding SBET is not surprising.

Specifically, Arkham Intelligence discovered a wallet believed to be related to Sharplink transferring 4.364 ETH to the OKX exchange, causing a stir in the market and a flurry of sensational headlines to emerge. However, just a few hours later, the Chief Investment Officer (CIO) of SBET stated that this wallet address does not belong to the company at all.

Nevertheless, the market's overreaction is still a signal worth pondering.

In essence, the operational model of Sharplink is based on the accumulation cycle of ETH through equity funding. However, as SBET shares enter a correction phase in Q4, the big question arises: Is the current wave of panic exposing the true weakness in investor confidence — as warned by the analysis from CryptoQuant?

Sharplink's ETH reserves face a “real-world test” as losses increase

Theoretically, the trust in SBET is currently hanging by a thin thread.

At the peak of Q3, the unrealized profit of Sharplink Gaming (SBET) swelled to around 920 million USD, as the stock price surged close to the 40 USD mark, bringing the market capitalization to 4 billion USD. However, just a few weeks later, that valuation has plummeted, now standing at only 2.3 billion USD.

Data from CryptoQuant further highlights the grim picture: the unrealized losses of SBET have soared to 320 million USD as of November 4, coinciding with the time when the stock plummeted to 11 USD. With the current trading price around 11.90 USD, most shareholders are still far from breakeven.

Source: CryptoQuantIn this context, a sell-off of ETH initiated by Sharplink would not be an unlikely scenario.

The reason is very clear: Sharplink often raises capital by issuing additional shares to buy and accumulate ETH. But when the stock price plummets, this avenue for raising capital nearly closes — and the most viable option is to sell some of the ETH held to free up liquidity.

The recent shock has therefore become a sharp warning: the risk-reward ratio of DATs linked to Ethereum is clearly tilted against investors. If the current trend continues, a wave of ETH selling from Sharplink could very well become a reality.

SN_Nour