$64M Aave Loan Forces BTCS to Sell ETH Below Its Purchase Price

BTCS, a Nasdaq-listed company heavily invested in Ethereum, has been selling ETH at a loss to protect its $64 million borrowing position on Aave from potential liquidation as cryptocurrency prices decline.

According to its quarterly filing released Thursday, BTCS had approximately $64.1 million in outstanding debt on Aave as of November 9, including accumulated interest. The company had pledged 46,676 ETH as collateral, worth approximately $99.3 million at an Ethereum price of $2,127. This represented collateral coverage of roughly 155% against its outstanding liabilities.

The company acknowledged selling Ethereum below its original purchase prices to manage collateral requirements and maintain healthy borrowing ratios across its decentralized finance (DeFi) positions.

However, BTCS did not reveal the total amount of ETH sold or explain how much of its realized losses resulted specifically from efforts to protect its Aave loan.

Ethereum Could Trigger BTCS Liquidation Near $1,717

Aave monitors borrowing positions through automated smart contracts that continuously assess collateral coverage. Its system uses a health factor to determine whether a borrower’s deposited assets provide sufficient security against outstanding debt.

If the health factor drops below 1, the protocol can automatically liquidate part of the collateral to recover the borrowed funds.

BTCS explained that Aave typically recognizes around 80% of its deposited ETH for collateral calculations. Based on the November 9 figures, CoinDesk estimates that the company’s borrowing position had a health factor of approximately 1.24.

Under these conditions, Ethereum could fall to around $1,717 before the position becomes eligible for liquidation, assuming the loan balance and collateral holdings remain unchanged.

Ether traded near $1,950 on Friday, placing it approximately 12% above the estimated liquidation threshold. Nevertheless, the price remains significantly below the $2,127 level used in BTCS’s November 9 disclosure. The actual liquidation threshold may have shifted if the company has since adjusted its holdings or debt.

BTCS also faces constraints from its limited cash reserves. Its September-quarter report showed approximately $463,000 in available cash. Meanwhile, the company acknowledged that a substantial majority of its cryptocurrency holdings had been deposited on Aave as collateral, leaving those assets tied up while the borrowing remains outstanding.

BTCS’s Aave Borrowing Grows From $320K to $64M

The company’s reliance on Aave has increased substantially since its initial disclosure in April 2025. At that time, BTCS had borrowed approximately $320,000 against 446 ETH.

By August 2026, its outstanding borrowing had climbed to around $53 million, supported by more than 46,500 ETH in collateral.

Since the beginning of 2025, BTCS has accumulated approximately $152.4 million in stablecoin borrowings, mainly through Tether’s USDT and Aave’s dollar-pegged GHO token. Over the same period, it repaid roughly $89.4 million.

BTCS’s board has established a borrowing limit of 50% of the market value of its pledged collateral, measured through the loan-to-value ratio. This restriction prevents the company from borrowing more than half the value of its secured digital assets.

However, a declining Ethereum price can push the LTV ratio higher without any increase in borrowing. To bring the ratio back within the permitted range, BTCS may have to add more ETH as collateral, reduce its outstanding debt, or sell part of its cryptocurrency reserves.

With much of its Ethereum treasury already committed to Aave, further market weakness could leave the company with fewer options to protect its borrowing position and avoid liquidation.