Ethereum co-founder Vitalik Buterin has supported the growing role of Ether treasury companies while warning about the risks of excessive leverage in this sector.
Support for Ether Treasury Companies
Buterin remarked on the Bankless podcast that Ether treasury companies provide valuable services in expanding investor access to Ethereum. He emphasized that such firms offer valuable options for investors unable to directly hold ETH.
Risks of Overleverage for ETH
However, Buterin expressed concern that overleverage could threaten ETH's stability. He cited a scenario where a sharp drop in ETH prices could lead to forced liquidations, driving prices down further. Buterin recalled past crises, such as the downfall of Terra in 2022, stressing the importance of the ETH community's discipline to avoid similar fates.
Growth of Ether Treasury Holdings
Currently, the market for public companies holding Ether has rapidly grown, reaching a value of $11.77 billion. BitMine Immersion Technologies leads with 833,100 ETH worth $3.2 billion, making it the fourth-largest cryptocurrency holder among publicly traded firms.
In light of the growing popularity of Ether treasury companies and the potential risks, it is important to monitor market dynamics and institutional actions to minimize possible negative consequences.
