As the market was painted red, problems arose in Ethereum. The leading altcoin was in free fall last week. Now, things seem to be on the verge of getting worse with the additional losses of the day. Various crypto analysts are predicting what could happen if ETH price drops below $1,200.
As Defi protocols can sell $900M in ETH, leading altcoin at risk
ETH price drop can be attributed to several factors including the usual volatility effects across the entire market as well as whale movement in DeFi protocols. Looks like whales are selling. One example was reported by PeckShieldAlert on Twitter. Blockchain security firm pointed out that 28,000 ETH worth 37.4 million were sold by MarkerDAO to settle debts.
According to PeckShieldAlert/, wETH After the USDC pair dropped to $941, 65,000 more sold for the same reason.
We have discussed the causes of ETH-stETH imbalance in this article as Kriptokoin.com.
Crypto companies Celsius, Parsec and Kaicho Preparing to sell Ethereum
Celsius Network has stopped all transfers, withdrawals and swaps on its network. It has also transferred around 104,000 ETH to FTX in the past three days. Parsec.finance reports that around $900 million will be liquidated if Ethereum drops between $1100 and $1,200. This is because of the pressure in the DeFi area, which is affecting MarkerDAO, AAVE, and Compound in particular to maintain their stability.
Kaicho Capital Investment Leader Ajibola Lawal explained what he will do to hedge his positions in his recent statements:
Ethereum is currently trading at $1,221, down over 16% From what you see, the point where this waterfall comes from is fifty-fifty. Because as we’ve seen their purges, at-risk players can also try to hold their positions. The challenge they face is when the prevailing selling pressure suddenly explodes on their initiative.
As it stands now, ETH is approaching this breaking point. The leading altcoin is currently trading around $1,233. Thus leaving only a small gap to reach the purge point. Basically, liquidation happens when an exchange decides to close an investor’s position due to the loss of the initial margin. At this point, there is not enough money in the investor’s account to maintain an open position.
Bear market
Bearish sentiments have been flying all over the crypto space since the beginning of the year. The crypto market has experienced a massive pullback over the past few months. Indeed, there are predictions in this direction from popular crypto market players like Peter Brandt. Peter Schiff also predicted that ETH could drop below $1000.
At the time of writing, the market was in a state of flux as the market crashed on a harsh reminder of what had happened during the surge below $24,000 in May.
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