Ethereum News Today: Ethereum Creator Warns Overleveraged ETH Treasuries Risk 30% Price Drop

Ethereum co-founder Vitalik Buterin has raised concerns about the risks associated with companies holding large amounts of Ethereum (ETH) in their corporate treasuries, particularly when such holdings are leveraged. Buterin, speaking during a recent interview, emphasized that if companies overextend their debt to maintain or grow their ETH holdings, it could lead to a destabilizing cascade of forced liquidations and price declines. He warned that a 30% drop in ETH’s value could trigger a feedback loop, causing further declines and damaging the asset’s credibility [1].

Buterin explained that while the practice of holding ETH in corporate treasuries can provide social and economic value—offering more avenues for investors to access the asset—he urged caution. He noted that the social coordination around ETH as a corporate asset is beneficial, but the use of leverage introduces unnecessary systemic risk [2]. He also acknowledged that many companies are approaching their ETH holdings responsibly, but the potential for overleveraging remains a concern, especially in times of market volatility [3].

The trend of corporate Ethereum treasury holdings has been on the rise, with companies now collectively holding approximately $12 billion in ETH. Entities such as BitMine have taken a lead in this growing trend, as more firms look to diversify their balance sheets with digital assets [4]. Buterin’s warning comes at a time when public companies are increasingly allocating significant portions of their treasuries to cryptocurrencies, a move that has drawn attention from both investors and regulators [5].

Buterin also highlighted the potential for a dangerous chain reaction if companies with overleveraged ETH positions face a sharp market correction. He described a scenario in which a modest price drop could lead to forced liquidations, further driving down the price and eroding confidence in the asset [6]. While the majority of participants in the Ethereum ecosystem are not reckless, he stressed that the risks associated with leverage cannot be ignored [7].

Despite his concerns, Buterin remains supportive of the broader trend of corporate ETH holdings. He acknowledged the utility of these treasuries in increasing the visibility and accessibility of Ethereum for a wider range of investors. He also praised the innovation in Ethereum fund management, noting that some firms are outperforming traditional financial instruments like U.S. spot ETH ETFs [8].

Buterin’s remarks underscore the need for prudence and transparency in how companies acquire and manage their ETH holdings. As the adoption of digital assets in corporate treasuries continues to grow, his insights serve as a timely reminder of the potential pitfalls that come with leveraging in the crypto space.

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Source:

[1] Benzinga, [https://www.benzinga.com/crypto/cryptocurrency/25/08/47020128/ethereum-creator-warns-of-dangers-from-companies-holding-eth-treasuries](https://www.benzinga.com/crypto/cryptocurrency/25/08/47020128/ethereum-creator-warns-of-dangers-from-companies-holding-eth-treasuries)

[2] The Daily Hodl, [https://dailyhodl.com/2025/08/09/vitalik-buterin-issues-ethereum-alert-says-eth-treasury-companies-could-lead-to-the-downfall-of-second-largest-crypto-asset-heres-why/](https://dailyhodl.com/2025/08/09/vitalik-buterin-issues-ethereum-alert-says-eth-treasury-companies-could-lead-to-the-downfall-of-second-largest-crypto-asset-heres-why/)

[3] BitDegree, [https://www.bitdegree.org/crypto/news/ehtereums-vitalik-buterin-supports-eth-holdings-cautions-against-risky-debt](https://www.bitdegree.org/crypto/news/ehtereums-vitalik-buterin-supports-eth-holdings-cautions-against-risky-debt)

[4] CoinCentral, [https://coincentral.com/vitalik-buterin-supports-ethereum-treasury-companies-but-cautions-on-risk/](https://coincentral.com/vitalik-buterin-supports-ethereum-treasury-companies-but-cautions-on-risk/)

[5] Binance, [https://www.binance.com/en/square/post/28078192027417](https://www.binance.com/en/square/post/28078192027417)

[6] Cryptomus, [https://cryptomus.com/blog/vitalik-buterin-supports-ethereum-treasury-firms-but-warns-of-overleverage-news?srsltid=AfmBOoqdGjdUILtxHmvre__0_RymNHeeKEQ35E9agum5sRSDbHnd1Fxy](https://cryptomus.com/blog/vitalik-buterin-supports-ethereum-treasury-firms-but-warns-of-overleverage-news?srsltid=AfmBOoqdGjdUILtxHmvre__0_RymNHeeKEQ35E9agum5sRSDbHnd1Fxy)

[7] AInvest, [https://www.ainvest.com/news/ethereum-news-today-vitalik-buterin-warns-overleveraged-eth-treasuries-risk-systemic-instability-2508/](https://www.ainvest.com/news/ethereum-news-today-vitalik-buterin-warns-overleveraged-eth-treasuries-risk-systemic-instability-2508/)

[8] BeInCrypto, [https://beincrypto.com/ethereum-treasury-risks/](https://beincrypto.com/ethereum-treasury-risks/)