Ethereum Price Drops Below $2,077 but Holds Above $2,000 Amid Market Volatility
What does the Ethereum price drop mean for you?
Ethereum, the second-largest cryptocurrency by market capitalization, breached an important threshold on Sunday. This has led to fears of forced liquidations and further price declines.
Ethereum Price Performance
Ethereum (ETH) fell below $2,077, a level where the TWAP trading strategy ended. About $91 million in long positions were liquidated in the last 24 hours. Despite the weekend pullback, Ethereum still held onto the $2,000 mark. At the time of publication, the ETH price was at $2,045, recording double-digit gains in the last month.
What is the TWAP Trading Strategy?
The Time Weighted Average Price (TWAP) strategy distributes a large single order into smaller amounts that are executed at regular intervals. This reduces the impact of a large trade and prevents sudden fluctuations. The systematic purchase led to a linear growth of the open interest in ETH futures contracts.
Increased Volatility Expected
Crypto market researcher Maartunn predicted “significant volatility” for Ethereum in the coming days. According to his research, the TWAP purchase started at $1929 and ended at $2077, during which ETH added more than $900 million to its open interest.
Risk of Liquidations
However, the recent decline of ETH below $2,077 has put pressure on the positions. If the market runs against a leveraged position, the risk of liquidation increases significantly. In this case, the traders who used the TWAP strategy were threatened by forced liquidations. This could further pull down the price of Ethereum.
Market Sentiment Turns Bearish
The consequences of this development were already noticeable. Notably, about $91 million in long positions in ETH futures were liquidated in the last 24 hours. This led to a shift in market sentiment. The number of traders holding long positions significantly dropped compared to those on the short side.
Sources: AMBCrypto, CoinMarketCap, CryptoQuant, Coinglass.
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