According to CoinDesk, Ether (ETH) has experienced an 11.5% decline over the past 24 hours, bringing it closer to significant liquidations on the MakerDAO platform. The second-largest cryptocurrency is nearing a critical point where three MakerDAO positions, valued between $109 million and $126 million each, could be liquidated if ETH prices fall to $1,926, $1,842, and $1,793. Currently, Ether is trading around $2,390 following a broad market sell-off influenced by declining sentiment and a drop in global equities.
The recent downturn raises questions about whether this marks the onset of a bear market. Historically, assets have seen declines of up to 30% during bull markets as a means to eliminate excessive leverage before recovering. Since December 16, ETH has decreased by 42%. For the MakerDAO liquidations to occur, ETH would need to drop an additional 19%, potentially triggering a cascade of liquidations across decentralized finance (DeFi) protocols and exchanges.
In the past day alone, $296 million worth of ETH positions have been liquidated on various exchanges, as reported by CoinGlass. Such deleveraging events, driven by sell-offs, can offer opportunities for astute traders to acquire undervalued assets. The spot price during these events is often influenced by a temporary lack of liquidity rather than the asset's intrinsic value.
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