The local asset of Ethereum, Ether (ETH), has seen a substantial decrease of approximately 11.5% in the last 24 hours, raising concerns among market participants. This decline highlights a potential liquidation risk of $340 million in collateralized debt positions on MakerDAO.
Liquidations Triggered by ETH Price Drop
As ETH hovers around $2,390, fluctuations in global markets are influencing investor sentiment. Particularly, the risk of large-scale liquidations is heightened due to leveraged positions in the cryptocurrency market. Analyses suggest that if ETH prices drop to $1,926, $1,842, or $1,793, three major positions on MakerDAO could face liquidation.
Investors Reassess Their Strategies
The steep decline in ETH prices is prompting investors to reevaluate their risk management strategies. According to analyses, if prices fall an additional 19%, the liquidation risk on MakerDAO is expected to increase further. This scenario could trigger cascading liquidations in decentralized finance (DeFi) protocols and lead to broader market fluctuations.
Expert Opinions and Market Outlook
According to current data, ETH has lost a total of 42% since December 16. However, some experts assert that such fluctuations are inherent to the cryptocurrency market. Although predicting market conditions remains challenging, it is emphasized that investors should exercise caution in this volatile environment.
The decline in ETH price poses significant risks for leveraged investments and necessitates a reassessment of risk management strategies. In such conditions, it is crucial to remain vigilant and carefully consider investment decisions.
