Vitalik Buterin Flags Leverage Risk That Could Hit Ethereum Hard
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Ethereum co-founder Vitalik Buterin has voiced concern that the growing trend of companies holding large ETH reserves might carry hidden dangers.
Speaking on the Bankless podcast, he warned that if these corporate treasuries use their holdings as collateral for excessive borrowing, a market pullback could set off a wave of forced liquidations. In a steep downturn, he suggested, a 30% dip could quickly snowball into far deeper losses, undermining confidence in the network.
While cautious on leverage, Buterin stressed that corporate ETH ownership still brings strategic benefits. It broadens investor access, strengthens Ethereum’s economic network, and offers new on-ramps for those seeking indirect exposure.
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Ethereum’s profile has been bolstered in recent weeks by U.S. policy moves and institutional flows. The passage of the GENIUS Act – establishing a federal framework for stablecoins — reinforced Ethereum’s role in digital finance. Meanwhile, record inflows into ETH ETFs have highlighted surging demand from large investors, even as Buterin urges the market to avoid the kind of overleveraging that could turn strength into fragility.
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