Vitalik Buterin on ETH Treasuries: Support & Leverage Warnings
Buterin Backs ETH Treasury Firms, Cautions on Leverage Risks
Ethereum co-founder Vitalik Buterin has voiced his support for the growing trend of Ether (ETH) treasury companies. However, he also cautioned that this trend could lead to an "overleveraged game" if not managed carefully.
In a recent interview on the Bankless podcast, Buterin highlighted the value of public companies acquiring and holding ETH, stating that it exposes the token to a wider range of investors.
"There's definitely valuable services that are being provided there," Buterin noted, adding that these ETH treasury firms provide investors with "more options," particularly those with "different financial circumstances."
Crypto treasury companies have gained popularity, attracting significant capital to purchase and hold cryptocurrencies like Bitcoin (BTC) and Ether (ETH), allowing traders to gain exposure to these assets.
The Risks of Over-Leveraging
Buterin emphasized that the future of ETH should not be jeopardized by excessive leverage.
"If you woke me up three years from now and told me that treasuries led to the downfall of ETH, then, of course, my guess for why would basically be that somehow they turned it into an overleveraged game."
He described a potential scenario where a drop in ETH's price could trigger forced liquidations, causing a cascading effect that drives the price further down and damages the token's credibility.
Despite these concerns, Buterin expressed confidence in the ETH investor community's ability to avoid such a collapse, stating, "These are not Do Kwon followers that we're talking about," referencing the co-founder of the collapsed Terra blockchain.
The Rise of ETH Treasury Firms
The market for public companies holding Ether has grown substantially, reaching $11.77 billion. Leading the pack are BitMine Immersion Technologies and SharpLink Gaming.
- BitMine holds 833,100 ETH, valued at $3.2 billion.
- SharpLink Gaming holds approximately $2 billion worth of ETH.
- The Ether Machine holds $1.34 billion worth of ETH.
The Ethereum Foundation and PulseChain are also among the top holders.
ETH's Market Performance
ETH has experienced volatility this year, falling from around $3,685 in January to a low of $1,470 in April. However, it has since rebounded, rallying over 163% to its current price of around $3,870.
The rise of ETH treasury firms has contributed to this resurgence, helping ETH narrow the gap with Bitcoin and Solana in the current bull cycle.