Ethereum Whales Face Liquidation as ETH Dips Below $2,000

• Ethereum’s decline below $2,000 triggered mass liquidations, forcing major holders to add collateral to avoid losing their positions.
• A whale lost $2.27 million in DAI debt, while another entity deposited $56 million in ETH to reduce its liquidation risk.
• Liquidity accumulation around $2,000 and $2,200 suggests a potential ETH relief rally as short positions come under pressure.

Ethereum’s latest price decline has put major holders under pressure, triggering liquidation risks across decentralized finance (DeFi) protocols. As ETH fell below $2,000, several whales scrambled to bolster their collateral to avoid forced liquidations. ETH reached a low of $1,791.23, activating multiple liquidation tiers. One whale lost $2.27 million in DAI debt, while the liquidated collateral was valued at $1.23 million.

Another significant position faces liquidation if ETH declines by another 6.4%. The loan remains 182% collateralized but is vulnerable due to increased volatility. A separate vault could be liquidated at $1,798.83, despite maintaining a 153.42% collateral ratio. This borrower has secured 75 million DAI for other DeFi operations, but liquidation would result in over 60,000 ETH being absorbed by the protocol.

Whale Attempts to Recover as Liquidation Looms

A whale attempted to buy the ETH dip with a $30.8 million DAI purchase at $2,014, but the position remains underwater. Another dormant account, inactive for months, deposited additional collateral just in time to avoid liquidation at $1,836 per ETH. MakerDAO’s oracle, which reflects slightly higher ETH prices, may have helped mitigate some of the worst liquidation events.

Speculation arose that the Ethereum Foundation was among the entities facing liquidation, but community members quickly debunked the claim. While a wallet identified by Arkham Intelligence was initially linked to the foundation, Ethereum developer Eric Conner refuted the connection. The foundation, which previously deployed $120 million into Aave, Compound, and Maker, has publicly disclosed its DeFi positions.

Large Borrowers Adjust Strategies Amid Market Volatility

A major entity recently deposited an additional 30,098 ETH, worth over $56 million, reducing its liquidation price to $1,127. The loan, which remains 244% overcollateralized, holds 100,394 ETH as security. The borrower has access to $78 million in borrowed DAI and can generate an additional 53 million DAI.

In the last 24 hours, ETH liquidations totaled over $238 million, affecting both long and short positions. Bybit led the liquidations, with 83% affecting short positions. Liquidity has shifted toward short positions around $2,000 and $2,200, suggesting a potential relief rally as market participants seek to target these positions. Open interest remains low at $9.22 billion, with traders exercising caution.

The market’s focus on short liquidations could ease pressure on DeFi vaults. However, centralized derivative trading continues to influence DeFi liquidations. With liquidity clustering around key resistance levels, ETH may see short-term upward movement as traders capitalize on accumulated short positions.