Shares of ETHZilla (ETHZ) fell nearly 30% on Friday after the crypto treasury firm disclosed a shareholder-led offering of up to 74.8 million convertible shares, triggering investor concerns about dilution.

The offering would increase the company’s outstanding shares by approximately 46%, from 164.4 million to 239.3 million, according to a recent SEC filing. ETHZilla will not receive proceeds from the offering, as it involves existing shareholders converting and selling their shares.

The sharp selloff came despite the company holding 82,186 ETH, valued at roughly $349 million, along with $238 million in cash equivalents. The ether was acquired at an average price of $3,806.71. ETHZilla, formerly 180 Life Science, rebranded earlier this month as it pivoted from biotech to become a digital asset treasury.

The strategic shift initially boosted investor confidence, with ETHZ shares up 80% year-to-date prior to the latest drop. The company has also drawn institutional support, including a 7.5% stake held by Peter Thiel’s Founders Fund, which is also invested in other Ethereum-focused ventures.

While Ethereum (ETH) has gained 38% year-to-date, outperforming bitcoin’s 24% and the broader CoinDesk 20 Index’s 17%, the ETHZ selloff highlights investor sensitivity to capital structure changes. Broader equity markets, including the Nasdaq, S&P 500, and Dow, rose on Friday following dovish comments from Fed Chair Jerome Powell, and ETH gained 9%—making ETHZilla’s decline more striking.

Investors appear to be weighing ETHZilla’s substantial crypto reserves against the immediate impact of shareholder dilution. Despite the firm’s strong balance sheet, confidence has been shaken over the potential erosion of shareholder value in the short term.