BTCS Sells Ethereum at a Loss to Protect Its $64M Aave Loan

Nasdaq-listed company BTCS, which maintains Ethereum as its primary treasury asset, has been selling ETH below its original purchase price to prevent its $64 million borrowing on the Aave lending protocol from approaching liquidation.

In a quarterly filing released Thursday, the company disclosed that its outstanding Aave debt stood at approximately $64.1 million as of November 9, including accumulated interest. The borrowing was secured by 46,676 ETH, valued at $99.3 million based on an Ethereum price of $2,127. This placed its collateral coverage at roughly 155% of the outstanding loan.

BTCS acknowledged that it had sold some of its Ethereum holdings at prices below their original acquisition costs. The company explained that these transactions were part of its strategy to manage collateral requirements and maintain healthy borrowing ratios across its decentralized finance (DeFi) positions.

However, BTCS did not reveal the quantity of ETH sold to support its Aave position or specify how much of its realized losses resulted from these transactions.

Aave Liquidation Risk Emerges Near $1,700

Unlike traditional financial institutions, Aave does not rely on loan officers to monitor borrowers or request repayments. Instead, its decentralized lending protocol continuously calculates a metric known as the health factor, which measures the value of a borrower’s eligible collateral against outstanding debt.

The calculation accounts for the portion of collateral that the protocol recognizes. If a borrower’s health factor falls below 1, Aave can automatically liquidate a portion of the pledged assets to recover the outstanding loan.

BTCS stated that Aave generally recognizes approximately 80% of its deposited ETH as eligible collateral. Based on the November 9 figures, the company’s loan had an estimated health factor of 1.24.

CoinDesk calculations suggest that Ethereum would need to fall to approximately $1,717 for the position to reach its liquidation threshold, assuming the collateral and outstanding debt remain unchanged.

Ether was trading near $1,950 on Friday, leaving its price approximately 12% above the estimated liquidation level. However, this remains considerably below the $2,127 price used in BTCS’s November 9 financial snapshot. The company’s actual borrowing position may also have changed since that disclosure.

BTCS also has limited cash reserves available to address potential financial pressure. Its cash balance stood at approximately $463,000 at the end of September. Furthermore, the company disclosed that a substantial majority of its digital asset holdings had been deposited on Aave as collateral, restricting its ability to access those assets while the borrowing remains outstanding.

BTCS Borrowing Expands From $320,000 to $64 Million

BTCS’s exposure to Aave has increased considerably over the past year. When the company first disclosed its lending position in April 2025, it had borrowed just $320,000 against 446 ETH.

By August 2026, its outstanding borrowing had climbed to approximately $53 million, backed by more than 46,500 ETH.

Since the beginning of 2025, BTCS has borrowed approximately $152.4 million in stablecoins, primarily Tether’s USDT and Aave’s dollar-pegged GHO token. During the same period, it repaid around $89.4 million of its borrowings.

The company’s board has authorized additional borrowing on Aave, subject to a maximum loan-to-value (LTV) ratio of 50%. This means BTCS cannot borrow more than half the market value of its pledged collateral under the approved limit.

However, declining Ethereum prices can quickly push the LTV ratio higher without any additional borrowing. When collateral values fall, BTCS must restore its borrowing position by depositing more ETH, repaying part of its debt, or selling digital assets to reduce its exposure.

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