Ethereum treasury company BTCS has sold ETH below its purchase price to manage a $64.1 million loan on Aave, as falling Ethereum prices reduce the value of the cryptocurrency backing its debt.
Summary
- Ethereum treasury firm BTCS sold ETH below its original purchase price to manage its Aave borrowing positions.
- BTCS reported $64.1 million in Aave debt backed by 46,676 ETH worth $99.3 million as of November 9.
- The estimated liquidation level stands near $1,717 per ETH, assuming the borrowing position remains unchanged.
- BTCS recorded $30.6 million in realized digital asset losses during the first nine months of 2026, involving ETH sales and liquidity pool transactions.
- The company held approximately $463,000 in cash at September 30 but reported $142.6 million in cash and digital assets on November 9.
In its November 12 quarterly filing with the U.S. Securities and Exchange Commission, the Nasdaq-listed company disclosed that 46,676 ETH secured its borrowings as of November 9. The collateral was worth approximately $99.3 million at an ETH price of $2,127, covering about 155% of the outstanding debt, including accrued interest.
The company said it monitors its borrowing positions and adjusts collateral or repays debt when market conditions require additional protection against liquidation.
BTCS sells Ethereum below cost to protect Aave collateral
BTCS acknowledged realizing losses on Ethereum sales while managing its decentralized finance borrowing arrangements. The company said, “Sales of ETH were executed at prices below their original cost basis,” explaining that the transactions formed part of its collateral management strategy.
The filing did not disclose how much ETH was sold specifically to manage the Aave loan or how much of its reported losses resulted from those sales. However, BTCS recorded approximately $30.6 million in realized losses on digital asset transactions during the first nine months of 2026.
The losses came from two activities: selling ETH to manage borrowing positions and recognizing accounting losses when transferring ETH into liquidity pools. The company reported a net loss of approximately $49.5 million for the nine-month period, compared with a $52.2 million profit a year before.
BTCS confirmed it “has not experienced any full or partial liquidation events” involving its DeFi borrowings through November 11. Its ETH sales were therefore part of its own collateral management activities, not forced liquidations by the lending protocol.
Ethereum price decline puts $1,717 liquidation level in focus
Aave uses a health factor to determine whether borrowers have sufficient collateral to support their outstanding loans. The measure compares collateral value, adjusted by the applicable liquidation threshold, with the amount owed.
Under Aave’s rules, a health factor below 1 makes a position eligible for liquidation. Other market participants can then repay some or all of the outstanding debt and receive collateral in exchange.
BTCS said Aave’s liquidation threshold for ETH collateral is generally 80%. Applying that percentage to the company’s November 9 figures produces an estimated health factor of 1.24 and a potential liquidation price near $1,717 per ETH.
The estimate assumes that the loan balance, collateral holdings and applicable protocol parameters remain unchanged. Changes in borrowing, interest or collateral would alter the calculation.
Ethereum was trading near $1,932 on November 13, down approximately 5.6% over 24 hours, according to crypto.news price data. At that price, ETH would need to fall roughly another 11% to reach the estimated liquidation level.
BTCS Aave borrowings reach $64.1 million
BTCS has relied on decentralized lending alongside traditional financing to support its Ethereum operations. Between January 1, 2025, and November 11, 2026, the company borrowed approximately $152.4 million in stablecoins through Aave and repaid around $89.4 million.
Its borrowings primarily involved Tether’s USDT and Aave’s GHO stablecoin. Both are designed to maintain dollar-denominated values, while the Ethereum pledged as collateral changes in market value.
At September 30, the company’s DeFi borrowing balance stood at approximately $63 million. The November 9 figure reached $64.1 million, including interest.
BTCS disclosed variable annual borrowing rates of approximately 6.54% for USDT and 4.5% for GHO as of November 9. These rates fluctuate with Aave’s lending conditions and utilization levels.
The borrowing strategy forms part of a longer-running effort to expand the company’s Ethereum holdings. In May 2025, BTCS arranged convertible financing to support additional purchases and validator operations.
As previously reported, the company had accumulated 55,788 ETH by July 2025, using equity financing, convertible debt and DeFi borrowing.
BTCS reports $463,000 in cash amid collateral restrictions
The company’s September 30 balance sheet showed approximately $463,000 in cash and cash equivalents, down from $1.53 million at the beginning of 2026.
BTCS said a substantial majority of its digital assets measured at fair value were deposited on Aave as collateral. Those holdings remain subject to protocol restrictions while the related borrowings are outstanding, limiting their availability for general corporate purposes.
However, the company reported approximately $142.6 million in cash, stablecoins and liquid digital assets as of November 9. Its total debt obligations were approximately $82 million, comprising the $64.1 million Aave position and $17.9 million in convertible notes.
At September 30, BTCS reported total exposure to 59,856 ETH, including 49,571 ETH held at fair value and another 10,285 ETH underlying liquidity pool positions.
Management said the Aave loans have no fixed maturity date and remain outstanding until repaid or liquidated under the protocol’s rules. The company expects its available resources and financing arrangements to support operations for at least 12 months, subject to market conditions.
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