Bittime - The price of Ethereum (ETH) underwent a significant correction in recent days, sparking concern among investors. The surge in liquidations could be one of the factors driving the price decline. Let's analyze more deeply the impact of liquidation on the next movement of ETH.
The Liquidation Surge That Occurred
According to Parsec data, DeFi experienced more than $5.4 million in collateral liquidations in the last 24 hours, with $4.27 million tied to ETH. If ETH falls to $3,008, an additional $24 million in collateral could face liquidation.
On-chain derivatives exchanges such as GMX, Kwenta, and Polynomial triggered total liquidations of more than $52 million during the same period. The recent surge in collateral liquidation, especially related to Ethereum, has significant implications for cryptocurrency price stability.
When large volumes of collateral are liquidated, it exacerbates the already high price volatility in the Ethereum market. This increased volatility could trigger a wave of selling as liquidated assets are sold, further pressuring the price of ETH.
As a result, investors and traders may be increasingly cautious and hesitant to engage with Ethereum, fearing further price declines. Additionally, negative sentiment resulting from the apparent liquidation could shake confidence in ETH, leading to an extended period of price suppression.
This volatility, coupled with the visibility of large-scale liquidations, could undermine market sentiment around Ethereum, eroding confidence in its stability and resilience.
Furthermore, the Ethereum network may experience congestion during periods of high volatility and increased liquidations, leading to higher transaction fees and slower processing times.
Congestion can also prevent users from interacting with Ethereum-based applications and decentralized finance (DeFi) protocols, limiting the platform's growth and adoption.
Nonetheless, the put-to-call ratio for ETH is increasing, indicating that traders are likely bearish on ETH.
Check Today's Crypto Market:
| ETH/IDR | SOL/IDR |
| BTC/IDR | ATOM/IDR |
| USDT/IDR | ARB/IDR |
What is Liquidation?
Liquidation occurs when an exchange or crypto trading platform automatically closes leveraged traders' positions if the value of their collateral asset (usually ETH) falls below a certain threshold. This liquidation aims to reduce risks for the platform and prevent greater losses.
How Does Liquidation Affect ETH Price?
A surge in liquidations can negatively impact the price of ETH in several ways:
- Forced Selling: Liquidation forces the exchange to sell liquidated traders' collateral assets, in this case ETH. This increases selling pressure in the market, which can lead to a drop in prices.
- Negative Sentiment: Mass liquidations can trigger negative sentiment among investors, prompting them to sell their own assets for fear of further price declines.
- Reduced Liquidity: Liquidations can reduce market liquidity, which in turn can lead to increased ETH price volatility.
ETH Price Today
Source: Bittime
Based on the Bittime market on March 21 2024, the price of Bitcoin ETH/IDR has reached IDR 55,783,307 per coin, an increase of 9.70% in 24 hours.
Also Read How to Buy Crypto:
Possible Next Moves for ETH
The impact of the surge in liquidations on ETH's subsequent movements remains uncertain. Some possible scenarios:
- Trend Reversal: If negative sentiment subsides and selling pressure reduces, ETH has the potential to recover and the bullish trend may return.
- Further Correction: If investors remain worried and continue selling their assets, ETH may experience a deeper price correction.
- Consolidation: ETH may enter a consolidation phase, where the price moves within a certain range until a clearer trend is established.
Other Factors Affecting ETH
Apart from liquidation, several other factors can also influence ETH's future movements, such as:
- Regulation: Regulatory developments regarding cryptocurrencies could have a significant impact on the market, including ETH.
- Institutional Adoption: Increasing adoption of ETH by financial institutions could drive the price up.
- News and Events: Ethereum-related news and events, such as increased developer activity or new product launches, can influence investor sentiment.
Conclusion
A surge in liquidations is one factor that can cause a decline in the price of ETH. However, ETH's next movement will also be influenced by other factors beyond liquidation. Investors need to monitor these factors and conduct their own research before making an investment decision.
Check Crypto Prices Today:
How to Buy Ethereum (ETH) on Bittime
You can buy and sell Ethereum (ETH) in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti.
Ethereum (ETH) is available on Bittime with the market pair ETH/IDR . To be able to buy ETH/IDR at Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Learn the complete guide on how to buy Ethereum (ETH) on Bittime.
Monitor price chart movements for Ethereum (ETH) , Bitcoin (BTC) , Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
Also read:
Prices Drop, How Can Investors Have the Sentiment to Buy ETH Because It Will Be Bullish?
Risk Averse Ethereum Implementation Strategy for Playing Merge
DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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