Analyst: That’s why Ethereum crashed 4% in a single second yesterday
Ethereum has seen a sharp correction in the past few days while Bitcoin has slid down.
At the time of writing, ETH is trading for $ 370 – roughly 7.5 percent down from its high of $ 400 set just 36 hours ago. The cryptocurrency failed to overcome the crucial resistance of $ 400, despite Bitcoin hitting a new annual high of $ 14,100 over the weekend.
The sell-off at ETH was marked by a series of rapid sell-offs, suggesting that there may be a contingent of Ethereum investors who are seeing a bear trend in the asset in the short term and are therefore trying to liquidate their coins as soon as possible.
Ethereum sell-off marked by selling pressure from large investors
As the crypto asset analyst „CL“ notes, the decline in Ethereum began on Monday with a rapid sell-off on Binance’s futures market.
According to his data, the coin fell $ 15, or about four percent, in a single second. CL claims the decline was due to cascading „trigger orders“ on Binance’s futures – suggesting that there are whales or big traders who didn’t expect the coin to drop much lower.
While the movement was initially bought up, the cryptocurrency continued to move down after that rapid sell-off.
The pressure from the spot market also drove ETH down.
For example, shortly after the Ethereum correction, the crypto asset analysis and data firm Coin Metrics reported that users had deposited 4,000 ETH into Binance twenty minutes before the downturn began. 4,000 ETH is currently around 1.5 million dollars.
Coin Metrics‘ chart also shows that thousands of ETH were sent to Binance hours before the downward move – along with thousands of ETH sent to exchanges like Kraken after the first part of the downward move.
Another risk of falling for ETH
Analysts fear that after falling to $ 370, ETH will have more leeway to move down.
Su Zhu, CIO and CEO of Three Arrows Capital, joked on November 2nd that a valid „yield farming“ strategy would be to deliver wrapped bitcoins to Compound, lend ETH, sell that ETH for wrapped bitcoins, and then repeat . This would create a leveraged short position on Ethereum versus Bitcoin while also adding COMP.
„Safe idea: deliver wBTC to Compound, lend ETH and sell uniswap to wBTC, supply wBTC again, manage COMP + generate permanent profits from ethbtc and reap the benefits.“
Others take a similar view and comment that the macroeconomic aspects are much clearer for Bitcoin at the moment than for Ethereum.