Ethereum Faces Major Liquidation Risks As Price Plummets
Mar 31
2 min read
Ethereum's price has recently dipped below critical support levels, putting significant pressure on large investors, known as whales, who risk losing millions in forced liquidations. As the cryptocurrency market experiences volatility, two major holders of Ethereum are on the brink of liquidation, with their combined collateral valued at approximately $238 million.
Key Takeaways
Two Ethereum whales are at risk of liquidation due to falling ETH prices.
A total of 125,603 ETH, worth around $238 million, is vulnerable on the MakerDAO platform.
Current liquidation thresholds are set at $1,787 and $1,701 for the respective whales.
Market conditions, including inflation fears and negative economic data, are contributing to the price decline.
Current Market Conditions
Ethereum has seen a significant decline, trading at around $1,800, down 6% over the past week. This downturn is attributed to several factors:
Economic Uncertainty: Rising inflation fears and disappointing economic data from the U.S. have led investors to reduce their exposure to riskier assets, including cryptocurrencies.
Market Reactions: Recent announcements, such as potential tariffs, have heightened market volatility, causing further declines in crypto prices.
Whale Activity: Two major Ethereum holders have borrowed against their ETH holdings on MakerDAO, with their positions now precariously close to liquidation thresholds.
Liquidation Risks for Whales
The two whales in question have taken out substantial loans using their Ethereum as collateral:
Whale One: Holds approximately 64,793 ETH, with a liquidation price set at $1,787. This whale narrowly avoided liquidation earlier this month by partially repaying their debt but now faces renewed risks as ETH prices continue to fall.
Whale Two: Holds about 60,810 ETH, with a liquidation threshold of $1,701. This whale has not made any transactions recently, raising concerns about their ability to respond to the market's volatility.
If Ethereum's price drops below these thresholds, MakerDAO will automatically liquidate their collateral to cover the loans, potentially triggering a cascade of further liquidations across the market.
Potential Market Impact
The looming threat of large-scale liquidations could exacerbate the current market downturn. Historical data shows that significant liquidations can lead to a domino effect, pushing prices down further and triggering additional sell-offs. For instance, a recent liquidation event involving WETH resulted in a sharp price drop and increased market volatility.
Future Outlook
Despite the current bearish sentiment, some analysts remain cautiously optimistic about Ethereum's potential for recovery. A double-bottom reversal pattern is being observed, suggesting that if Ethereum can hold above critical support levels, it may bounce back. However, the risk of liquidation remains a significant concern, and traders are advised to monitor the situation closely.
In conclusion, while Ethereum's price struggles, the potential for large-scale liquidations poses a serious threat to the market. Investors and traders alike are watching closely as the situation develops, with hopes for a rebound tempered by the reality of current market conditions.
Sources
These crypto whales will lose $230m if Ethereum’s price continues to fall – DL News, DL News.
Ethereum whales face liquidation risk as ETH prices fluctuate, Crypto Briefing.
Ethereum’s Falling Price Pushes Whale Toward $238M Liquidation, TronWeekly.
Ethereum Eyes $1,500 as $229M in Whale Liquidations Loom, The Crypto Basic.