Two major ETH vaults on the Maker platform are at risk of liquidation, as ETH prices drop below key support levels. Such developments could impact market volatility.
Threats of Liquidation for ETH Vaults
Wu Blockchain reports that two massive ETH vaults on the Maker platform are nearing liquidation. Together, they hold 125,603 ETH, valued at approximately $238 million. As ETH's price has dropped, the health ratio of these positions has also fallen to 1.07. The crucial levels for liquidation are set at $1,805 and $1,787. If ETH's price falls below these levels, automated liquidations could result in an influx of ETH onto the market, increasing selling pressure and leading to heightened volatility.
Price Level Challenges for ETH
The ETHUSD perpetual contract recently fell 6.72%, trading at $1,870.01. This decline led to a breakdown below the $2,200 support level, which previously acted as a stronghold during past price movements. However, bearish momentum has prevailed, pushing ETH toward lower support zones. The price is now nearing a long-term rising trendline that started at the lows of 2022. Previously, this trendline served as a crucial support point, suggesting a possible reversal if the price stays above it. The next crucial support levels are at $1,670 and $1,450. A failure to maintain these levels could accelerate downward momentum.
Increased Market Volatility
If liquidation occurs, the sudden release of ETH could heighten market turbulence. The increased supply could drive prices lower, unsettling traders. Such market dynamics typically lead to rapid price fluctuations. Moreover, the broader trend reveals a weakening bullish structure with consistent lower highs. Sellers maintain control while ETH struggles to reclaim lost ground. Hence, the market remains under pressure as ETH trades beneath previous support.
Market participants are closely monitoring these key support levels. Breaking them could trigger further liquidations and deepen the downward trend. If ETH stabilizes above the ascending trendline, optimism for a rebound may return. However, the looming threat of liquidation keeps the market on edge.
