Ethereum Whale’s Massive Purchase Raises Liquidation Concerns
Introduction:
A recent large-scale purchase by an Ethereum whale of 25,674 ETH worth approximately $61 million has raised concerns about potential liquidation events if the price of ETH drops below a certain threshold. The whale is believed to have acquired the mentioned ETH from MakerDAO, a decentralized lending platform that allows users to collateralize their crypto assets to secure stablecoins like DAI.
The Whale’s Strategy and Profit:
Reports from Lookonchain indicate that the whale spent 61 million DAI to buy the ETH, utilizing 5,851 ETH worth $14 million as collateral. They managed to generate a profit of $99,000 through this strategy.
Liquidation Risk:
Despite the profits gained, the whale also faced the risk of liquidation. If the price of ETH falls below a certain level, the collateral held by the whale may not be sufficient to cover their debts, triggering an automatic liquidation by MakerDAO to recover the DAI.
The Current Situation:
With Ethereum’s price currently hovering around $2,280 and experiencing a 3.56% decrease in the past 24 hours, the whale mentioned in this case might be at risk of liquidation. The Health Factor in MakerDAO is currently low, standing at 1.03.
Market Volatility:
Since reaching its all-time high of $2,448 on December 28th, Ethereum’s price has been consistently declining. If ETH continues to close in the red, it may mark the third consecutive day of decline.
READ MORE "Whale Alert: Dormant Ethereum Whale Resurfaces with Thousands of ETH"
Future Outlook:
Regardless of the direction of ETH’s price, the fate of the whale is now intertwined with the performance of Ethereum and the overall cryptocurrency market, which is currently witnessing profit-taking by investors towards the end of the year 2023.
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