- The recent Ethereum crash saw major investors, or whales, scrambling to prevent massive liquidations, with some injecting millions in collateral or selling ETH to lower their risk as prices briefly rebounded.
- Meanwhile, firms like Longling Capital, already hit hard in past downturns, also faced liquidation threats, highlighting the ongoing volatility in crypto markets.
The recent market downturn has sent shockwaves through the cryptocurrency world, leaving even the largest Ethereum investors—commonly known as whales—scrambling to prevent devastating liquidations. As Ethereum’s price plummeted nearly 18%, some of these major holders faced massive financial risks, with billions of dollars at stake.
Ethereum’s Sharp Decline
Ethereum, which recently traded as high as $2,150, saw a drastic drop to as low as $1,750 within a short span. This dramatic plunge put significant pressure on whales who had taken out large decentralized finance (DeFi) loans using ETH as collateral. As the price dipped dangerously close to their liquidation thresholds, these investors were forced to take swift action to secure their positions.
DeFi Loans in the Crosshairs
A prime example of the market turmoil involved a whale who had borrowed over 73 million DAI using 67,000 ETH (valued at nearly $122 million) as collateral on MakerDAO. Given the rapid drop in Ethereum’s price, this whale was at serious risk of liquidation as its threshold was set at $1,836. However, thanks to temporary inefficiencies in the oracle price feeds, the investor was able to act quickly—paying back 1.53 million DAI and selling nearly 3,000 ETH to lower their liquidation price to $1,781. Fortunately, the market rebounded slightly to $1,900, providing a much-needed lifeline.
Another whale with 61,000 ETH worth $109 million also narrowly escaped liquidation as a similar oracle discrepancy allowed the price to stabilize before crossing the critical threshold of $1,798.64.
Ethereum Foundation Whale Doubles Down
One particularly high-profile whale, with reported ties to the Ethereum Foundation, took drastic measures to safeguard their position. Facing a potential wipeout, they transferred an additional 30,000 ETH—worth over $56 million—to their MakerDAO position, bringing their total collateral to over 100,000 ETH (valued at $182 million). This move effectively reduced their liquidation price to $1,127.06, significantly lowering their immediate risk.
Longling Capital’s History of Liquidation Woes
Meanwhile, Longling Capital, a venture firm founded by Meitu’s Cai Wensheng, also found itself in the liquidation danger zone. The firm reportedly sold 21,000 ETH on Binance—worth approximately $39 million—and transferred 299 ETH to Aave in what appears to be an effort to rebalance its loan exposure. This is not the firm’s first encounter with major losses, as it previously saw 94,000 ETH (worth $114 million) liquidated during the 2022 bear market.
Wider Market Impact
The ongoing market turmoil is not limited to cryptocurrency. Traditional financial markets have also been shaken, with the Nasdaq Composite falling 4%—its worst session since September 2022—while the S&P 500 saw a 2.7% decline, reaching five-month lows. As economic uncertainty grows, concerns about a possible recession continue to weigh on investors across all markets.
Conclusion
The latest Ethereum crash serves as a stark reminder of the volatility of cryptocurrency markets and the risks associated with leveraged positions in DeFi. While some whales have managed to narrowly avoid liquidation, others continue to face significant financial strain. As the market stabilizes, the coming days will reveal whether these strategic maneuvers were enough to keep these whales afloat or if further turmoil lies ahead.
