- The sudden price drops and flash crashes in recent days have contributed to the high volume of liquidations, primarily affecting lending protocols Aave and Compound.
- This situation mirrors the period following the collapse of the Terra ecosystem in June 2022, raising concerns about the ongoing volatility in the crypto market.
The first two weeks of April saw a high volume of liquidations in Ethereum lending markets, hitting levels not seen since June 2022. Despite the month barely being half over, liquidations reached significant figures, with nearly $80 million in liquidations in lending protocol Aave and nearly $50 million in Compound.
This substantial rise in liquidations is largely due to recent market volatility and flash crashes, which contributed to the downturn. The last time the volume of liquidations was higher was in June 2022, following the collapse of the $40 billion Terra ecosystem.
In addition to lending markets, traders have also faced increased liquidations as bullish bets soured due to Bitcoin’s recent decline from its all-time high. Data from CoinGlass shows nearly $1.7 billion in crypto liquidations over the last three days, with the majority of liquidations impacting bullish positions.
The sharp decrease in the price of CRV also threatened to liquidate a loan held by Curve founder Michael Egorov. While Egorov managed to avoid liquidation, he expressed his intention to reduce exposure in a message to the Curve Telegram.
Overall, the early part of April has been a challenging period for Ethereum lending markets and traders, highlighting the continued risks and volatility within the crypto ecosystem.
Ongoing Market Volatility Raises Concerns
The significant liquidations in Ethereum lending markets during the first half of April highlight the continued volatility in the crypto market. These rapid fluctuations in prices pose challenges not only for lenders and traders but also for prominent figures in the industry. As the month progresses, market participants must remain vigilant and prepared for further instability, which could lead to additional liquidations and broader repercussions for the crypto ecosystem.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
