Ethereum (ETH) Drops Over 8% Amid Liquidation Rumors

Ethereum (ETH) has experienced a significant decline, dropping more than 8% as speculation spreads across social media platforms. Rumors suggest that the Ethereum Foundation could potentially face liquidation if the price of ETH falls to $1,100, sparking concern among crypto traders and investors.

Social Media Fuels Speculation About Ethereum Foundation Liquidation

Over the past week, social media channels have been buzzing with claims that the Ethereum Foundation might liquidate up to $100 million worth of ETH if prices dip further. This speculation originated from a series of posts on X (formerly Twitter), where traders debated the potential impact of such a move.

One trader commented,

“If the Ethereum Foundation gets liquidated at $1,100 to bottom us for the cycle, surely that ends the simulation.”

Another user compared the potential scenario to the infamous FTX collapse but suggested that the Ethereum Foundation would likely “just add collateral” to avoid liquidation if the situation became critical.

Ethereum Price Trends and Recent Decline

At the time of writing, the Ethereum Foundation has not publicly addressed these rumors. However, the price of ETH has been on a notable downtrend. Over the past month, ETH has dropped by 28%, with a nearly 10% decline in the past seven days alone.

Currently, Ethereum is trading at approximately $1,889, having slipped below the $2,000 mark in recent days. On March 10, ETH reached a low of $1,791, marking its first dip below $2,000 since late 2023.

What Triggered the Liquidation Rumors?

The rumors surrounding the Ethereum Foundation’s potential liquidation stem from a 30,098 ETH deposit into a Maker vault by a wallet suspected to belong to the foundation. This raised concerns that the Ethereum Foundation might be preparing to sell off its holdings. However, key Ethereum developers, including Eric.eth and Sassal.eth, have denied that the wallet in question is associated with the foundation.

Understanding the Maker Vault and Associated Data

A Maker vault is a smart contract in the MakerDAO ecosystem on Ethereum, used for creating and managing collateralized debt positions. The wallet in question currently holds 100,394.447 ETH as collateral against a debt of 78,035,224.7182 DAI, with a liquidation threshold set at $1,127.065 per ETH.

Although the wallet was initially flagged by blockchain analytics as linked to the Ethereum Foundation, on-chain data points to a different origin. The wallet’s initial funding can be traced to an early Ethereum investor known as jonny.eth, challenging the claim that it belongs to the foundation. It’s worth noting that the wallet received a 4 million DAI transfer from the Ethereum Foundation ETH Sale in May 2022, which may have contributed to the confusion.

Market Uncertainty Amid ETH Volatility

The ongoing dip in Ethereum’s price has added to the uncertainty in the crypto market. The rumors surrounding the Ethereum Foundation’s potential liquidation highlight the influence of social media on market sentiment and the importance of verifying on-chain data before drawing conclusions.

Investors and traders should remain cautious, especially during periods of heightened volatility. Keeping track of reliable sources and monitoring price trends can help navigate the challenges of the cryptocurrency market effectively.

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