LD Capital Founder's Leverage Strategy: Borrowing During Bull Market to Hold Spot for New Opportunities

LD Capital founder Jack Yi explains that during the bull market, he borrowed leverage to hold spot and wait for new opportunities. He leveraged $270 million on Aave to purchase ETH, resulting in an all-in cost of $2,250. With ETH's price reaching $3,127, his unrealized gains of 182,000 ETH have reached $160 million.

BTCS Inc. (NASDAQ: BTCS) has significantly bolstered its financial position through an additional borrowing from the AAVE decentralized-finance (DeFi) protocol. On July 14, 2025, BTCS borrowed an additional USDT 2.34 million, increasing its total AAVE borrowings to USDT 17.8 million [1].

The debt is secured by 16,232 ETH, valued at approximately USD 49.1 million at the current ETH price of USD 3,025 per ETH. The variable borrowing rate stands at 5.4%, while the staked ETH collateral generates around 2% in returns, resulting in an estimated net funding cost of 3.4%. The proceeds from this borrowing were used to purchase an additional 2,731 ETH, valued at USD 8.24 million, which BTCS intends to stake or has already staked through its NodeOps validator business [1].

Post-transaction, BTCS holds 31,855 ETH with a fair value of USD 96.2 million, along with total cryptocurrency and cash holdings of USD 100.6 million. The company's board has authorized management to utilize leverage up to 40% of total assets, including convertible notes, at the time of borrowing. This structure provides a substantial collateral cushion of approximately 2.8 times, but also introduces liquidation risks if ETH prices fall or AAVE rates rise sharply [1].

Investors should carefully consider the potential benefits of this strategy. The increased staking yield could expand BTCS's revenue, while the higher leverage could amplify both gains and losses. The absence of a fixed maturity on the debt means that the AAVE smart contract can automatically liquidate collateral if the health factor falls below one, potentially crystallizing losses during market stress [1].

For growth-oriented investors, this move aligns with BTCS's strategy to monetize validator economics and expand its NodeOps footprint. However, the near-term earnings per share (EPS) impact is limited as interest expenses will primarily offset staking rewards. The stock becomes more sensitive to ETH price swings, making it a leveraged play on Ethereum [1].

References:
[1] https://www.stocktitan.net/sec-filings/INAQW/8-k-insight-acquisition-corp-warrant-reports-material-event-abe3edfe68fb.html