BTCS Sells Ethereum At A Loss To Protect $64M Aave Loan

TL;DR

• BTCS sold ETH below cost to manage collateral and health factors on an Aave loan that stood at $64.1 million including accrued interest on November 9.
• The debt was backed by 46,676 ETH worth $99.3 million, while calculations from the snapshot placed its health factor near 1.24 and liquidation around $1,717.
• BTCS reported no liquidations through November 11 and said its ETH sales were DeFi collateral management, not protocol-triggered liquidation.

BTCS sold ETH below its original cost basis as it managed collateral supporting a large Aave borrowing position, according to the company’s latest SEC filing. As of November 9, BTCS owed approximately $64.1 million on Aave, including accrued interest, backed by 46,676 ETH valued at $99.3 million using a $2,127 ETH price. The company did not disclose how much ETH it sold for this purpose. The sales show how an Ethereum treasury strategy can become tied directly to DeFi collateral management when asset prices weaken.

Falling ETH Prices Increase Pressure on BTCS’s Aave Position

Aave loans are overcollateralized, meaning falling ETH prices can require BTCS to add collateral or repay debt to preserve required ratios. The filing says Aave’s liquidation threshold for ETH collateral is generally 80%, while loans can face full or partial liquidation when their health factor drops below 1. Using the November 9 debt and collateral snapshot, the position’s health factor was roughly 1.24 and the implied liquidation level was near $1,717 per ETH, assuming the position remained unchanged. BTCS reported no full or partial DeFi liquidations through November 11. At September 30, BTCS said a significant majority of its digital assets were deployed on Aave as collateral against outstanding borrowings.

The borrowing position has expanded substantially since BTCS first began using Aave. From January 1, 2025 through November 11, 2026, the company borrowed approximately $152.4 million in stablecoins, primarily USDT and GHO, and repaid about $89.4 million. BTCS said the transactions included onchain debt refinancing activity and that management continuously monitors collateral values and loan health factors. The strategy reflects a broader shift toward corporate Ethereum treasuries using DeFi lending to access liquidity without immediately disposing of their underlying ETH holdings. Its board permits new Aave borrowing only up to a 50% loan-to-value ratio.

Liquidity remains another consideration. BTCS had only $463,250 in cash and cash equivalents at September 30, although its November 9 liquidity included approximately $142.6 million in cash, stablecoins and liquid digital assets, primarily ETH. The company said future realized gains or losses will depend on digital asset prices, sale timing and DeFi activity. Sales below cost therefore represent active balance-sheet management rather than an Aave-triggered liquidation. Still, the episode highlights the additional risk created when corporate crypto holdings serve as collateral for variable-rate onchain debt during periods of Ethereum market volatility.