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TLDR
- ETH dropped approximately 10% on Monday to $1,820, reaching lows not seen since late 2023
- A major $74M loan collateralized with $130M in ETH faces imminent liquidation risk
- Market data shows only 50% of ETH holders currently profitable, down from 82% earlier this year
- Exchanges recorded $1.8B in ETH outflows last week, the largest withdrawal volume since 2022
- Technical analysis suggests potential further decline to $1,700 or even $1,300 support levels
Ethereum prices have taken a sharp downturn in recent trading. The cryptocurrency fell approximately 10% on Monday, touching $1,820.
This price action represents ETH’s lowest valuation since December 2023. The decline is causing waves across decentralized finance markets.
ETH Price
DeFi lending platforms are particularly feeling the pressure. These services rely heavily on ETH as collateral for various lending operations.
One high-profile loan has caught market attention. A borrower on Sky (previously called Maker) has a $74 million DAI loan backed by ETH.
The loan used 65,680 ETH tokens as collateral. This represented about $130 million in value before the recent price drop.
The loan’s terms set its liquidation threshold just above the $1,900 mark. When ETH prices broke below this level, liquidation risk became immediate.
Blockchain records show the borrower moving quickly to protect their position. They transferred 2,000 ETH from Bitfinex to bolster their collateral.
This emergency action added approximately $4 million in additional backing. However, continued price drops forced further defensive measures.
The borrower subsequently withdrew $1.6 million in USDT from Binance. They converted these funds to DAI and paid down part of their loan balance.
These efforts reduced the total debt to $73.1 million. The new liquidation price now sits at $1,836, still dangerously close to current trading levels.
Liquidation Risk
The risk extends beyond this single loan. DefiLlama data indicates $13.6 million in loans face liquidation if ETH hits $1,857.
Another $117 million would be liquidated at the $1,780 level. The total exposure grows to $366 million if ETH drops an additional 20%.
Liquidations create compounding market pressure. When loans are liquidated, protocols sell the collateral, adding to selling pressure.
This pattern can create a downward price spiral. Each liquidation potentially triggers others as prices continue falling.
Market sentiment metrics show growing pessimism. Glassnode reports only half of ETH holders remain in profit positions.
This marks a dramatic shift from early 2023, when 82% of holders were profitable. Many investors now face difficult decisions about holding or selling at a loss.
Technical indicators support the bearish view. ETH has traded below the Ichimoku Cloud since January 25, signaling continued downward momentum.
If current support fails, analysts point to $1,700 as the next critical level. A breach below this could trigger those “catastrophic liquidations” many fear.
Some projections suggest $1,300 as a possible bottom target. This would represent a further 30% decline from current levels.
Yet some counter-indicators suggest potential stabilization. Last week saw $1.8 billion in ETH move from exchanges to private wallets.
This represents the largest such outflow since December 2022. Such movements typically indicate long-term accumulation rather than selling preparation.
If buyer demand returns, some optimistic analysts project potential recovery to $4,045. This would represent a 120% increase from today’s prices.
However, near-term prospects remain challenged. Bear market sentiment continues to dominate trading activity for Ethereum and the broader crypto market.
