According to blockchain expert Colin Wu and on-chain tracker Parsec Finance, the Ethereum loan and borrowing market is in jeopardy as Ethereum’s price hits unsafe levels and lies in store for an actual disaster.
The issue is the number of market liquidations that will occur if ETH falls to or below $1,150. Over $500 million in on-chain collateral will reportedly disappear.
Ethereum’s price hits unsafe levels. Source: TradingView
The massive liquidation will exacerbate the market’s decline and cause a significant outflow of capital from decentralised apps (DApps). The sharp fall in decentralised application utilisation will reduce the network’s earnings.
Previously, numerous market and on-chain tracking services reported over $700 million in liquidations, which turned out to be a mistake on the API side of the centralised exchange. But with total liquidations exceeding $500 million, the pressure on the asset would intensify dramatically.
The market is bleeding after the inflation statistics.
Unanticipated inflation data is primarily responsible for the market decline in cryptocurrencies. The deteriorating value of the U.S. dollar caused a rise in commodities such as gold, whose value rose by over 3% in 24 hours.
New concerns emerged for Ethereum after the stETH/ETH pair’s de-pegging, triggered by the significant sell-off and lack of liquidity. The sell-off evaporates by the falling profitability of the ETH 2.0 staking contract, the rearrangement of the test network, and early depositors collecting profits.
Risky assets such as cryptocurrency and tech stocks experienced large outflows and declines in value. Bitcoin has lost roughly 5.5% of its value in the past 24 hours, while Ethereum has dropped 12%.