Vitalik Buterin’s Cautious Optimism for Ether Treasury Companies
Ethereum’s co-founder, Vitalik Buterin, has expressed his support for what are known as Ether treasury companies, but he also issued a word of caution: if not managed wisely, this trend could turn into an “overleveraged game.”
Public Companies Diving into Ether
During a recent appearance on the Bankless podcast, Buterin highlighted the growing interest of public companies in acquiring and holding Ether (ETH). He sees this as a positive development, as it opens up the token to a wider array of investors.
“There are definitely valuable services being offered here,” he said. Buterin pointed out that companies opting to invest in ETH treasury firms, rather than holding the token directly, provide investors “more options,” particularly for those with varying financial backgrounds.
The Rise of Crypto Treasury Companies
Crypto treasury companies are the latest buzz on Wall Street, attracting billions of dollars. These firms buy and hold large amounts of cryptocurrencies, thus providing traders with exposure to popular tokens like Bitcoin (BTC) and Ether.
Leverage: A Double-Edged Sword
While Buterin supports this trend, he urges caution, emphasizing that Ethereum’s future success should not be undermined by excessive leverage.
“If you woke me up three years from now and told me that treasuries led to the downfall of ETH, my guess would be that somehow they turned it into an overleveraged game,” he mused.
He painted a grim scenario where a drop in ETH prices could trigger forced liquidations, setting off a chain reaction that drags the price down further and undermines the token’s credibility.
Are ETH Treasuries Beneficial?
Buterin believes ETH being an asset that companies can hold in their treasury is beneficial, as it provides more options for investors. However, he remains vigilant about the risks.
“These are not Do Kwon followers we’re talking about,” he remarked, referencing the co-founder of the Terra blockchain, which collapsed in 2022. Buterin is optimistic that ETH investors are savvy enough to avoid such pitfalls.
The Surge of ETH Treasury Holdings
Public companies holding Ether have seen their market swell to $11.77 billion, led by firms like BitMine Immersion Technologies and SharpLink Gaming.
BitMine boasts holdings of 833,100 ETH, valued at $3.2 billion, making it the fourth-largest among companies holding any cryptocurrency. SharpLink and The Ether Machine have holdings worth $2 billion and $1.34 billion, respectively, with the Ethereum Foundation and PulseChain rounding out the top five.
ETH’s Comeback Story
ETH has had a bumpy year, dropping from around $3,685 in January to a low of $1,470 in April. However, it’s made an impressive comeback, surging over 163% to its current price of $3,870.
The rise of ETH treasury firms has played a significant role in this resurgence. This price rally has helped ETH close the gap on leading tokens like Bitcoin and Solana (SOL) in the current bull market.
