Latecomers in Ethereum Treasury Race Could Be Exposed
Ethereum treasury strategies are gaining popularity, but experts caution that chasing high yields may leave firms dangerously exposed if market conditions turn.
Sharplink Gaming co-CEO Joseph Chalom said in a recent interview that companies entering late into the Ether treasury space are the most vulnerable. “There will be people just like in traditional finance who wanna get that last 100 basis points of yield, and think that it is riskless,” Chalom explained.
While double-digit returns on Ether holdings are possible, Chalom stressed that these strategies involve credit risk, counterparty risk, duration risk, and smart contract risk. He warned that firms trying to compensate for missed opportunities could adopt “imprudent” risk-taking that may threaten both themselves and the wider sector.
Risks Extend Beyond Individual Firms
Chalom further cautioned that the broader industry could suffer if companies overextend during downturns. “If you overbuild and there is a downturn, how do you make sure your call structure is in such a way that you build to the highest price of Ethereum?” he asked.
Sharplink Gaming currently ranks as the second-largest public holder of ETH, with $3.6 billion worth of assets, just behind BitMine Immersion Technologies, which holds $8.03 billion. Collectively, ETH treasury companies control around 3.6 million ETH — valued at approximately $15.46 billion.
Experts Divided on the Model’s Future
Some analysts draw parallels between ETH treasury risks and the 2008 financial crisis, citing similarities with securitized debt obligations. Josip Rupena, CEO of lending platform Milo, noted that aggressive leverage could replicate systemic risks seen in traditional finance.
Others, however, see upside. Bitwise CIO Matt Hougan argued that ETH treasuries solve Ethereum’s narrative problem by framing it in a way traditional investors understand, thus accelerating institutional adoption.
Despite the optimism, Chalom remains cautious. “The biggest risk is that people who are far behind are going to take risks that I don’t think are prudent,” he said.
With Ethereum trading near $4,327, the debate highlights the delicate balance between growth and risk in crypto treasury strategies.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.