- Risk of Massive Liquidation Event for Ethereum: Crypto analyst Nicholas Merten warns of a potential liquidation event that could cause Ethereum prices to significantly dip.
- DeFi Overleveraged Traders at Risk: Merten notes that over-leveraged traders who deposited ETH as collateral using DeFi protocols could be forced to close their positions if ETH prices decline.
- Ethereum Needs More Liquidity: In order for Ethereum to break the $2,000 resistance level and confirm a bullish pattern, it needs more liquidity flowing in.
Risk of Massive Liquidation Event for Ethereum
Crypto analyst Nicholas Merten has warned of a potential liquidation event that could cause Ethereum (ETH) prices to significantly dip. The host of DataDash told his 511,000 YouTube subscribers that over-leveraged traders who deposited their ETH as collateral using decentralized finance (DeFi) protocols could be forced to close their positions if Ethereum prices start to decline. This sell-off could cascade and trigger a huge move to the downside for ETH.
DeFi Overleveraged Traders at Risk
Merten noted that if the collateral value of Ethereum goes down lower than what is required by the debt-to-loan ratio, then there will be an unavoidable liquidation event unless those traders can refinance and put in more stablecoin into the loan. Many traders may not have this extra liquidity on hand.
Ethereum Needs More Liquidity
In order for Ethereum to break its key $2,000 resistance level and confirm a bullish pattern via an ascending triangle, it needs more liquidity flowing in. If this does not happen soon, Merten believes that ETH will begin retesting its $1,600 low range and set off a chain of liquidations pushing it even lower.