- Whale faces liquidation on $340M short position amid falling Ether prices.
- Emergency deposit of 10,000 ETH raises liquidation threshold, avoiding major loss.
What happened: Emergency action saves whale from liquidation threat
A cryptocurrency whale has injected a significant emergency deposit of 10,000 ETH, valued at over $14 million, into a position on the decentralized finance (DeFi) platform MakerDAO. This move was made to avoid the liquidation of a $340 million short position in Ether, which had been exposed to market risks as prices of the cryptocurrency plunged. According to blockchain analytics firm Lookonchain, this action has raised the liquidation price of the position, which was at risk of being liquidated if Ether’s price fell below $1,119.3. The deposit also included 3.54 million Dai (DAI) to support the position further.
This development follows a significant event where another Ether investor faced liquidation on the Sky DeFi platform, losing over $106 million. The position in question involved 220,000 ETH, and the investor had suffered a severe loss when Ether’s price dropped by 14% on April 6. The whale’s emergency action came just hours after the liquidation event, underscoring the heightened risks in the crypto market amid the recent downturn. With the market under pressure, liquidation volumes have surged, with more than 446,000 positions liquidated in just 24 hours, totaling over $1.36 billion in losses.
Also read: Merit Systems raises $10 million from a16z and Blockchain Capital
Also read: Blockchain groups sue US IRS over new DeFi regulations
Why it’s important
The emergency deposit made by the whale highlights the vulnerability of large positions in the volatile cryptocurrency market. As crypto prices fluctuate, investors who take on significant short positions face the risk of liquidation if market movements go against them. The action taken by the whale on MakerDAO illustrates the risks associated with overleveraging in the DeFi space, where positions can be quickly liquidated if collateral is insufficient.
Furthermore, the liquidation event on the Sky platform underscores the widespread impact of market downturns, as it follows the loss of more than 67,000 ETH when Ether’s value plummeted. With positions worth hundreds of millions of dollars at stake, such liquidations can significantly affect the stability of the DeFi market. According to data from CoinGlass, the total value of liquidated positions has reached an alarming $1.36 billion in a short time, with both short and long positions impacted.
The broader context includes the impact of recent global events, such as the US President Donald Trump’s tariff announcement, which sent shockwaves through financial markets, including cryptocurrencies. These events add another layer of uncertainty to an already volatile environment, making risk management even more crucial for cryptocurrency investors.
