According to Cointelegraph, a potential 20% drop in Ether (ETH) prices could lead to a significant cascade of decentralized finance (DeFi) liquidations, amounting to $336 million. Kevin Rusher, founder of the real-world asset (RWA) lending platform RAAC, highlighted the critical price levels to monitor. A decline to $1,857 could result in $136 million in liquidations, while a further drop to $1,780 might trigger an additional $117 million in loan liquidations.
Rusher warned that the worst-case scenario would be a 20% decrease in ETH’s price to approximately $1,500, potentially liquidating $336 million in DeFi loans and causing market instability. He emphasized that a significant catalyst for this crisis is a $130 million ETH-backed loan in Sky, formerly known as Maker, which is nearing collapse despite efforts to add more collateral. Rusher suggested integrating RWAs, such as real estate and gold, into the DeFi ecosystem to mitigate volatility and prevent cascading liquidations due to overleveraging.
Ether has recently reached multi-year lows against Bitcoin (BTC), indicating a possible further 30% decline against the supply-capped asset. Some analysts predict a potential price bottom of $1,600 for ETH. Over the past week, ETH’s price has fallen by more than 15% and has remained below its 200-day exponential moving average (EMA) since February. The relative strength index (RSI) is currently at 31, nearing oversold territory, which could suggest a local bottom and a potential price reversal.
The disappointing performance of Ether has led some market analysts to recommend shifting investments into higher-performing altcoins to maximize profit potential. Trader Alex Krüger suggested in a recent post that it might be a good time to sell ETH in favor of higher beta altcoins. This article does not provide investment advice or recommendations. Readers are encouraged to conduct their own research before making any investment or trading decisions.
