Whale Dumps 25,800 ETH at a $32M Loss to Avoid Liquidation

• Whale sells 25,800 ETH at a $32 million loss to avoid liquidation.
• The whale’s current Aave position is still at risk with health rate.
• Ethereum’s price volatility creates continued risks for prominent leveraged positions.

In a high-stakes move, a whale sold 25,800 ETH, worth around $47.8 million, at a loss of over $32 million, as recently tweeted by Lookonchain on X. The sale was made to avoid the risk of liquidation on the decentralized finance platform Aave, where the whale currently holds 35,034 ETH, valued at $64.68 million. With a health rate of 1.4, dangerously close to liquidation levels, the whale had no choice but to offload a large portion of their holdings. The liquidation price is set at approximately $1,316, and this move was critical in preventing further losses in an already volatile market.

Liquidation Risk Forces Swift Action

The whale’s decision to sell 25,800 ETH came as a response to the growing liquidation risk. As the price of Ethereum fell, the whale’s exposure on Aave reached a critical point, pushing their health rate to 1.4, just above the dangerous threshold. When the health rate falls below 1.5, a forced liquidation typically occurs, where the collateral is sold to cover the debt. To stave off this risk, the whale decided to take the drastic step of liquidating a large portion of their holdings at a loss to maintain their position and avoid further financial strain.

https://twitter.com/lookonchain/status/1809049871422533984

This move follows a similar pattern of behavior observed in July 2024, when the same whale dumped 26,600 ETH at $3,102 to repay a debt on Aave, resulting in a 3.4% drop in Ethereum’s price. The whale then borrowed $80.9 million in USDT from Aave, using the funds to buy 26,235 ETH at a slightly lower price of $3,084. This prior move to reduce leverage mirrors today’s strategy, showing the whale’s effort to manage exposure to Aave through strategic sell-offs and re-entry points.

Aave Position and Ongoing Risks

The whale’s position on Aave still holds 35,034 ETH, worth $64.68 million. Despite the recent sale, the position remains at risk due to the health rate 1.4. If Ethereum’s price continues to fall, the whale may face another liquidation risk, as their position is perilously close to the liquidation threshold. With the liquidation price set at $1,316, Ethereum would need to drop significantly for the position to be forcibly closed, which would lock in substantial losses for the whale.

Market Outlook and Price Analysis

Ethereum’s current price, around $1,894.9, remains above the whale’s liquidation threshold. However, Ethereum has been in a downward trend, with the RSI at 34.38, indicating that the market is in a bearish state and potentially nearing oversold conditions. 

Ethereum 24h Chart Source: Tradingview

While there may be a short-term price rebound, the market sentiment remains bearish mainly, and the risk of further declines continues to loom. Support for Ethereum lies around $1,750, while resistance appears at $1,912. The whale’s move to sell many of their holdings underscores the intense pressure that large Ethereum holders face in navigating the volatile DeFi market. If Ethereum continues to dip, the whale’s position could face further risks, making this a crucial time for the whale to manage their exposure.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. CoinCryptoNewz is not responsible for any losses incurred. Readers should do their own research before making financial decisions.