Ethereum co-founder Vitalik Buterin expressed support for the so-called Ethereum treasury companies but warned that if mishandled, this trend could evolve into "over-leveraged games."
In a Bankless podcast interview released on Thursday, Buterin stated that the increasing number of publicly traded companies buying and holding Ether (ETH) has value, as it exposes the token to a broader investor base.
"There is indeed valuable service being provided there," Buterin said. He added that companies investing in ETH treasury firms rather than directly holding the tokens offer "more options" for people, especially those with "different financial situations."
The so-called cryptocurrency treasury firms have become one of Wall Street's hottest trends, raising billions to buy and hold large amounts of cryptocurrency, providing traders with exposure to tokens, with Bitcoin (BTC) and Ether being the most popular targets.
While expressing support, Buterin also remained cautious, emphasizing that the future of ETH should not come at the cost of excessive leverage.
He outlined a worst-case chain reaction: a drop in ETH prices leading to forced liquidations, which in turn creates a chain reaction that further drives down token prices while also causing a loss of credibility.
However, Buterin believes that ETH investors have enough discipline to avoid such a collapse.
"We're not talking about Do Kwon's followers," he said, referring to the co-founder of the Terra blockchain, which collapsed in 2022.
The market for publicly traded companies holding Ether has ballooned to $11.77 billion, led by BitMine Immersion Technologies and SharpLink Gaming.
BitMine holds 833,100 ETH, valued at $3.2 billion—ranking fourth among publicly traded companies holding any cryptocurrency.
SharpLink and The Ether Machine hold ETH valued at $2 billion and $1.34 billion, respectively, while the Ethereum Foundation and PulseChain make it into the top five.
ETH has had a mixed performance this year, dropping from about $3,685 in January to a low of $1,470 on April 9, before rebounding over 163% to its current price of $3,870.
The trend of ETH treasury firms has been a significant catalyst for the token's recovery. Its price rebound has helped ETH narrow the gap with Bitcoin and Solana (SOL), which are leading the current bull market cycle.
Related: EU regulators finalize draft rules for banks holding Bitcoin (BTC) and Ethereum (ETH)
Original: “Vitalik Supports Ethereum (ETH) Treasury Firms but Warns of Over-Leverage”
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