Crypto Alarm: Major Risk for Ethereum Traders Ahead, According to Analyst
Crypto analyst Nicholas Merten warns of a potential major liquidation event that could lead Ethereum (ETH) to significantly lower levels.
In a video for his YouTube subscribers, Merten highlights the risk faced by over-leveraged traders who have used Ethereum as collateral in decentralized finance (DeFi) protocols. If Ethereum prices experience a dip, these traders may be compelled to close their positions.
Merten explains that people deposit their ETH into DeFi protocols, receiving stablecoins in return, which they can use to speculate and potentially buy more Ethereum.
However, if Ethereum’s value declines drastically, the debt-to-loan ratio may become too high, and traders might not have enough collateral to cover their debt, leading to a liquidation event.
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To break the key resistance level at $2,000 and confirm a bullish ascending triangle pattern, Merten believes more liquidity needs to flow into ETH.
Otherwise, he predicts that ETH could retest the $1,600 level, triggering a chain of liquidations and a cascade to even lower levels.
At the time of writing, Ethereum is trading at $1,857, experiencing a 1% drop in the last 24 hours.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
