BTCS Sells ETH at a Loss to Protect $64M Aave Loan
Nasdaq-listed blockchain infrastructure company BTCS has sold Ether (ETH) below its original purchase price to manage the collateral backing a $64.1 million borrowing position on the decentralized lending platform Aave. The company disclosed the sales as part of its efforts to maintain the health of its DeFi borrowing arrangements and reduce the risk of liquidation.
In a quarterly filing, BTCS reported that its outstanding Aave debt, including accrued interest, stood at approximately $64.1 million as of November 9, 2026. The borrowing was backed by 46,676 ETH valued at approximately $99.3 million, based on an ETH price of $2,127.
The company did not disclose how much ETH it sold to manage the position or what portion of its realized losses resulted from those transactions.
BTCS Sells ETH Below Its Purchase Price
BTCS acknowledged that some of its ETH sales took place below the company's original cost basis. The transactions were part of its efforts to manage collateral requirements and maintain healthy borrowing positions on DeFi platforms.
“Sales of ETH were executed at prices below their original cost basis as part of the Company’s active management of collateral levels and health factors associated with DeFi borrowing arrangements,” BTCS stated in its quarterly filing with the U.S. Securities and Exchange Commission.
The disclosure highlights the pressure that falling cryptocurrency prices can place on companies using digital assets as collateral. When the value of deposited ETH declines while the borrowed stablecoin debt remains relatively unchanged, the collateral position becomes less secure. Borrowers may then need to add assets, repay debt or sell holdings to reduce their exposure.
BTCS's November 9 position included 46,676 ETH worth $99.3 million against approximately $64.1 million in outstanding debt. That represented collateral valued at roughly 155% of the amount borrowed.
ETH Price Nears the Estimated Liquidation Threshold
Aave uses a health factor to measure the safety of each borrowing position. The metric compares the value of supplied collateral, adjusted by its liquidation threshold, with the outstanding debt. When the health factor falls below 1, the position becomes eligible for liquidation.
Aave explains the mechanism in its official health factor and liquidation documentation. The protocol does not rely on a loan officer to decide when collateral is insufficient. Instead, eligible positions can be liquidated through transactions initiated by network participants.
BTCS's position had an estimated health factor of approximately 1.24 based on the November 9 figures and an assumed 80% liquidation threshold for its ETH collateral. Using those assumptions, the estimated liquidation price was approximately $1,717 per ETH, provided the debt and collateral balances remained unchanged.
ETH was trading around $1,950 on Friday, leaving its price roughly 12% above that estimated threshold. This calculation is not a fixed liquidation price: changes in ETH holdings, outstanding debt, accrued interest or applicable protocol parameters could alter the position's risk level. The company's actual collateral position may also have changed since November 9.
Cash Reserves and Collateral Exposure
BTCS reported approximately $463,000 in cash and cash equivalents at the end of September 2026. It also said a significant majority of its digital assets were deployed on Aave as collateral, limiting the company's ability to freely use those assets while the associated borrowing remains outstanding.
However, the filing provides a broader liquidity figure for November 9. BTCS reported approximately $142.6 million in cash, stablecoins and liquid digital assets, primarily ETH. These categories should not be treated as equivalent to immediately available cash, particularly because some digital assets are committed as collateral and their market values can fluctuate.
The distinction matters because collateral-backed borrowing can create liquidity pressure during a market downturn. If ETH loses value, BTCS may need to adjust its position even if the company continues to hold substantial digital assets.
Aave Borrowing Expanded From $320,000 to $64.1 Million
BTCS's use of Aave has expanded considerably since it first disclosed the borrowing arrangement in April 2025. At that time, the company had borrowed approximately $320,000 against 446 ETH.
By August 2026, its outstanding borrowing had grown to approximately $53 million, backed by more than 46,500 ETH. The latest November 9 disclosure put the debt at approximately $64.1 million, including accrued interest.
Between January 1, 2025, and November 11, 2026, BTCS borrowed approximately $152.4 million in stablecoins through Aave and repaid approximately $89.4 million. The borrowed assets consisted primarily of Tether's USDT and Aave's dollar-pegged GHO token.
The company's board permits new Aave borrowing up to a 50% loan-to-value ratio. This means BTCS can borrow no more than half the value of the collateral when establishing a position under that limit. A decline in ETH's market price can push the ratio higher without any additional borrowing, potentially requiring the company to add collateral or reduce its debt.
Why the Aave Position Matters
BTCS's disclosure illustrates the risks companies face when they use volatile digital assets to support large DeFi borrowing positions. Even when collateral initially exceeds the value of the debt, a sustained decline in the underlying asset can reduce the safety margin and bring liquidation closer.
Aave's protocol documentation explains how collateral values and liquidation thresholds affect a borrower's health factor. The protocol allows borrowers to improve that metric by adding collateral or repaying part of their debt.
For BTCS, selling ETH below its purchase price represents one part of its approach to managing collateral exposure. The company has not disclosed the exact volume of ETH sold for this purpose, the resulting realized losses or the latest health factor of its Aave position.
The November 9 figures therefore provide a snapshot rather than a real-time assessment. The position's risk will continue to depend on ETH's market price, the amount of collateral held, outstanding borrowing and applicable Aave parameters.
