Greetings to all the readers here,
Today we will talk about Ethereum Treasury Company and the reason for that is the rise of ownership being held by these treasuries. If you do not know, almost 2% of the Ethereum is being held by these treasuries and that is why I am going to discuss about the dos and donts of treasury holding the majority of the supply in coming years and whether we should be scared or not for this thing.
Before we move ahead, I want to make something clear that in just less than two months of time, the treasury companies of Ethereum have acquired around 1% of total Ethereum that is present in the world today. And their total Ethereum reserve is close to 2%, which I already discussed in the first paragraph. So what do you think?
Before we move ahead, I want to ask you all people what do you think? Is this a good thing for Ethereum or is it a bad thing for Ethereum? I am going to discuss it, but you can skip the blog for now, go in the comment section and leave your opinion and I will read it and surely reply to it as well.
I hope you have gone in the comment section and shared your opinion already, but even if you have not shared it, it is okay as we are going to discuss about what will happen if most of the Ethereum in the world is owned by treasury companies like Bitmine or Sharpling.
I have mentioned these names because they are the major players in the industry and they are responsible for holding most of the Ethereum when it comes to institutional treasury ownership. Let us discuss about the benefits first and then I will discuss about the disadvantages as well.
So what are the benefits of these treasuries acquiring more of Ethereum? I am going to share my views here based on a realistic situation where I am assuming that in the coming months and years around 10-15% of Ethereum will be acquired by these treasuries. So what will be the benefit of that move? The first benefit will be the price support.
Price support in the sense that large institutions will buy Ethereum from the market and that will reduce the market supply which means the number of Ethereum available for trading in the market, and it will definitely help push the price up.
So that is why I say that price support will definitely be a benefit when treasuries are going to acquire more of Ethereum. So yes, it will signal strong belief in the long term future of Ethereum and maybe it will encourage the investors to jump in and invest their money for the long term.
The second benefit that comes with the treasuries acquiring the majority of Ethereum is the legitimacy among people. People who do not trust Ethereum right now will have a reason to trust in Ethereum and think that it is a legitimate asset because big companies are not going to hold Ethereum just like that.
When big companies will hold Ethereum, it will actually mean that Ethereum is a serious asset and not a risky asset and maybe that will help people understand why Ethereum is a legitimate asset and it is capable of adoption throughout the world.
In my knowledge, as far as I know, these treasuries are used for taking Ethereum or they are either used in decentralized finance protocols. So obviously that is also beneficial for the Ethereum network.
Now let us talk about a few disadvantages which I can think of at this moment based on my limited knowledge. Blockchain is all about decentralization and that is what the idea was behind creating Ethereum, Bitcoin, or any other cryptocurrency in the world. If we are going with the idea of a few treasuries owning majority of the supply even if it is 10-20% , then obviously it will be a direct attack at the decentralization of blockchain technology.
A centralized risk will be the first disadvantage in my opinion because if majority of the supply or a big amount of supply is being held by a few treasury companies, they could influence governance and even the price of the assets.
Second, I think there can be a liquidity crunch for Ethereum, though I believe it is highly unlikely to happen for Ethereum because we already know that billions of dollars are traded in Ethereum every day. But still, there can be a scenario. We cannot say that there is a zero percent chance of liquidity crunch. Maybe in future, if companies acquire more and more Ethereum, then liquidity crunch can be one of the risks for sure.
But as we now have both sides of the story, we have already learnt about the good thing that can happen to Ethereum and we also learnt about the bad thing that can happen to Ethereum. So it is time to now share my opinion on whether it is more good and less bad or less good and more bad for Ethereum for treasury companies to acquire more of it.
In my opinion, I think it is more good for Ethereum and less bad for now because Ethereum momentum and credibility will go up by institutions acquiring Ethereum. Second, Ethereum is a digital asset and still a lot of people do not talk about it because Bitcoin is all over the headline most of the time especially after the proposal of exchange traded funds.
Bitcoin has outperformed Ethereum in all ways so maybe it will help Ethereum in getting legitimate market visibility and that is why I think it is more good and less bad. And if we talk about the long term perspective, I think me personally will keep my eyes on Ethereum as one of the long term holdings alongside Bitcoin for sure as the institution money the treasury companies invest money in Ethereum.
This is what I think and that is what I have shared and to end this blog I think Ethereum will definitely break its recent all time high looking at how fast the treasury companies are acquiring Ethereum and maybe we are going to see five thousand or six thousand or seven thousand dollar price point for Ethereum very very soon.
Thank You
