$500M of on-chain collateral will face liquidation if ETH falls to…

Please fol­low and like us:
Pin Share

Ethereum [ETH], the world’s largest alt­coin, might be los­ing its plot despite antic­i­pa­tion around the Merge. Rather, one can say that the token is see­ing a delayed plot. Ethereum core devel­op­er Tim Beiko recent­ly opined that the merge to proof-of-stake (PoS) would hap­pen between August and Novem­ber. This announce­ment fol­lows more bad news for Ethereum enthu­si­asts hop­ing for the com­ple­tion of the Ethereum 2.0 Merge in August.

Here comes another bomb…

Data on Coin­base revealed that Ethereum was priced at $1,519.03 to the U.S dol­lar at press time, hav­ing fall­en by 11.53% over the past 24 hours. In fact, ETH remains well below its all-time high of $4,891.70. In the last week alone, the cryp­to fell by 14.04%.

Accord­ing to blockchain data explor­er Blockchair, exact­ly 1,228,131 Ethereum trans­ac­tions failed between 1 May and 31 May. Fur­ther­more, the trend seemed to con­tin­ue at the time of writ­ing. Ergo, Ethereum’s trans­ac­tion vol­umes have also dropped sub­stan­tial­ly giv­en the cur­rent situation.

Towards the begin­ning of the week on 5 June, it went as low as 1.22 mil­lion ETH — A lev­el not seen since mid-2020. At press time as well, the num­ber stood in the one mil­lion to two mil­lion brack­et. Indeed, a down­trend since May 2021.

Source: ITB

While most cryp­tocur­ren­cy mar­ket par­tic­i­pants con­tin­ue to strug­gle with bear­ish days, HODLers of the sec­ond-largest asset by mar­ket cap­i­tal­iza­tion are also fac­ing record lows in prof­it. Indeed, the per­cent­age of Ethereum address­es in prof­its is at its month­ly low.

Also, as revealed by Glassnode’s on-chain alerts account on 12 June, HODLers in loss­es have sig­nif­i­cant­ly inclined.

This is the after-effect of increas­ing Ethereum sell­ing pres­sure as the price con­tin­ues to trade down south.

Saving the best for the last?

Anoth­er MAJOR con­cern for Ethereum is unprece­dent­ed liq­ui­da­tion at the moment. Around $230 mil­lion worth of ETH tokens were liq­ui­dat­ed in a day as the price declined. This is now, but the sheer decline could have some seri­ous impli­ca­tions soon. Con­sid­er this, for instance –

Accord­ing to par­sec finance, when ETH falls to around $1,150, near­ly $500 mil­lion of on-chain col­lat­er­al will face liq­ui­da­tion. wBTC will have more than $300 mil­lion of on-chain col­lat­er­al near $21,600 or face liquidations.

Source: Par­sec finance

Addi­tion­al­ly, as per Curve, the stETH/ETH pool asset ratio is skewed, with ETH account­ing for 24.11% and stETH account­ing for 75.89%. stETH de-pegged slight­ly and the unbal­anced pool sig­ni­fied that one of the assets, stETH in this case, is becom­ing more illiq­uid i.e. It would become dif­fi­cult to sell as there isn’t enough ETH liq­uid­i­ty to incor­po­rate sell orders of stETH at cur­rent prices.

Looks like we just have to wait and look for what’s in store next?



Source link

Please fol­low and like us:
Pin Share

Leave a Reply

Your email address will not be published. Required fields are marked *