What You Should Know
- Three MakerDAO positions totaling $340 million are at risk of liquidation if ETH falls below $1,900.
- Ether has seen a decline of more than 11%, currently priced at $2,390.
- This decline has resulted in $296 million worth of liquidations across centralized exchanges.
- Such a deleveraging event might provide a significant buying opportunity for experienced traders.
Background
Ether’s (ETH) recent 11.5% decline has brought the second-largest cryptocurrency closer to substantial $340 million liquidations on MakerDAO’s collateralized debt platform. According to on-chain data, three MakerDAO positions will be liquidated if ETH hits prices of $1,926, $1,842, and $1,793, with individual positions valued at $109 million to $126 million.
Ether is currently trading near $2,390, amid a broader market sell-off driven by reduced investor sentiment and a drop in global equity markets. The potential for further price drops raises the question of whether this is the onset of a bear market.
Historically, assets have dropped as much as 30% in prior bull markets to shed over-leverage before rebounding; ETH has decreased by 42% since December 16.
For the MakerDAO liquidations to occur, ETH must drop an additional 19%, which could lead to a cascading liquidation effect throughout decentralized finance (DeFi) protocols and exchanges.
Notably, $296 million in ETH positions have already been liquidated on exchanges within the last 24 hours, according to data from CoinGlass.
It’s essential to recognize that events triggered by sell-offs can create favorable conditions for savvy traders to acquire undervalued assets, as spot prices are often influenced by short-term liquidity shortages rather than true intrinsic values.
