1 Reason to Buy Ethereum

Key Points

• This summer saw the formation of new Ethereum treasury companies dedicated to buying ETH.

• Publicly traded Ethereum treasury companies now hold 3% of all ETH in circulation.

• While the sustainability of this business model is debatable, the price of Ethereum is likely to rise as long as the buying continues.

• 10 stocks we like better than Ethereum ›

Something very interesting happened for Ethereum (CRYPTO: ETH) investors this summer. Starting in May, new publicly traded Ethereum treasury companies appeared seemingly out of nowhere. All of them have one primary mission: to buy as much Ethereum as they can, as quickly as they can.

The impact these Ethereum treasury companies are having on the price of ETH is noteworthy. Over the summer, Ethereum more than doubled in value, to hit a new all-time high of $4,954.

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More big gains could be ahead if the pace of buying from these companies continues. If there's one big reason to buy Ethereum, this is it.

Image source: Getty Images.

The new Ethereum treasury companies

So what, exactly, is an Ethereum treasury company? In most cases, they're publicly traded companies transitioning away from their core business into the new business of buying Ethereum.

For example, the first notable Ethereum treasury company was SharpLink Gaming. Before May 2025, this company provided affiliate marketing services to sports betting sites (hence the nifty ticker symbol SBET). Now, it's billing itself as "one of the first NASDAQ-listed companies to develop a treasury strategy centered on ETH."

And there are plenty more examples. Arguably, the best-known example is Bitmine Immersion Technologies (NYSEMKT: BMNR). Before June, this was a Bitcoin mining company. Now, it's an Ethereum-buying machine with Tom Lee of Fundstrat at its helm.

The pace of buying by these companies is so rapid that entire websites are now dedicated to keeping track of their holdings. According to The Block, there are 10 publicly traded Ethereum treasury companies right now, holding ETH worth a total of $17.5 billion. That's approximately 3% of all ETH in circulation. If that figure approaches 5%, that's when you'll know things are really cooking.

The case for buying Ethereum

The logic for buying Ethereum is simple: Ethereum appears destined to be the blockchain of choice for building the new world of decentralized finance (DeFi). When it comes to DeFi, Ethereum is an absolute powerhouse. Its share of Total Value Locked (TVL), an important metric for measuring overall DeFi activity, is a whopping 64%. Nobody else even comes close.

When you layer in the new crypto legislation from the Trump administration, the picture gets even brighter for Ethereum. For example, stablecoins are a core building block of DeFi, and the Trump administration just passed new groundbreaking legislation for stablecoins. And the Trump family, via its growing number of crypto ventures, is taking an active stake in the world of DeFi.

There's actually a good reason why these digital asset treasury companies are rushing to buy as much Ethereum as they can. They view Ethereum as the future of finance, and the current moment as a unique opportunity to buy Ethereum at a very attractive price.

Does the business model make sense?

There's just one little problem with this logic. The business model only makes sense if the price of Ethereum is rising. As soon as the price of Ethereum stagnates or falls, the whole business model starts to unravel. Companies start having a harder time raising capital from investors, and this makes it impossible for them to ramp up their crypto buys. This then leads to less upward price pressure on Ethereum, and even more difficulty in raising capital.

To some degree, this might be happening now. Critics of these so-called digital asset treasury companies are becoming louder, and the price of Ethereum has dipped 20% from its all-time high in August. Some of these companies are now struggling, simply due to all the debt or leverage they are using to finance their crypto buys.

But, as they say, "always follow the money." And the money trail leads directly to these Ethereum treasury companies. Even if some of them have odd names -- like The Ether Machine or ETHZilla Corporation -- they have the ability to move the price of Ethereum. For better or worse, executives of these companies are showing up on financial TV networks such as CNBC and banging the table for investors to buy Ethereum.

How long can the buying continue?

Ethereum is now outperforming Bitcoin for the year, and that's no mean feat. For the year, Ethereum is up 20%, while Bitcoin is up 17%. So it's easy to see why money has been flooding into Ethereum in recent months. The returns are just too good to ignore.

That being said, investing in cryptocurrency is not for the faint of heart. If big-time investors decide to stop shoveling money into Ethereum treasury companies, then the crypto flywheel propelling Ethereum higher might come to an end. But until that happens, I'm bullish on Ethereum.

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Dominic Basulto has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum. The Motley Fool has a disclosure policy.