stETH, a staked variant of ETH, has been at risk for some time now. These two have a liquidity tie similar to Terra LUNA and UST. Now that the price gap between ETH and stETH is widening, some big investors are aggravating the situation by selling large volumes of altcoins.
Three Arrows Capital sells $33 million in altcoins
Venture capital firm Three Arrows on Tuesday traded nearly $33 million worth of Lido Staked Ethereum (stETH) for Ethereum on DeFi platform Curve. The move came as stETH prices further diverged from ETH prices in the secondary markets, putting pressure on investors using the DeFi token as collateral.
Co-founder, CEO and chief investment officer of Three Arrows Capital “Su Zhu” Three Arrows is the largest seller of stETH since last week. second largest investor. Trade firm Alameda Research traded nearly $1.5 billion worth of tokens – the entire balance – for ETH last week. The difference between STETH and ETH is probably due to this process, which also occurs in Curve. stETH is currently trading at $1,103.15 compared to ETH’s price of $1,173.96.
Three Arrows still has more tokens to sell
The $33 million exchanged by Three Arrows represents a significant amount of the firm’s stETH holdings, while according to crypto commentator mhonkasalo Three Arrows is in one of its wallets. it still holds about $22 million in tokens. On-chain data shows Three Arrows has been dumping stETH continuously since last month. The venture capital firm is now transferring the earned ETH to lending pools at AAVE and Lido.
While the fate of Three Arrows for stETH is uncertain, recent transactions show that the firm is trying to hedge this risk. However, his trades with Alameda have contributed to a huge imbalance in Curve’s stETH liquidity pool. About 80% of the pool now consists of tokens. This means more negatives for prices.
How does stake Ethereum affect the markets?
By itself, stETH has little impact on the ETH price or altcoin market. Even if the price of STETH drops, the token can still be used for an ETH when the merge starts. However, the uncertainty over the token is causing panic selling of ETH and other cryptos. Worse still, its use as collateral by major crypto lending platforms, notably Celsius, threatens to liquidate billions of positions. Now Celsius is facing a liquidity crunch which is affecting its leveraged position due to the drop in stETH prices. As Kriptokoin.com, we have discussed the details in this article.
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