Ether accounts for nearly half of $520M liquidations, despite weak on-chain data

Ether accounts for nearly half of $520M liquidations, despite weak on-chain data

In an unusual development, traders of Ether futures recorded liquidations almost twice as high as those of Bitcoin.

Bitcoin (BTC) and Ether (ETH) lost key support levels in the past 24 hours amid weakening sentiment for the broader crypto market - a move that caused more than $520 million worth of liquidations, data shows.

Ether-tracked futures lost more than $236 million, nearly double the $125 million in bitcoin futures. The losses were unusual for Ether, which usually has lower liquidations than bitcoin on average trading days.

Futures on Stepn GMT tokens posted losses of $23 million as Chinese authorities banned play of the popular "step-to-earn" protocol in the country. Futures on Solana (SOL) lost $11 million, while metaverse-focused Sandbox (SAND) posted losses of $9 million.

Ether fell as low as $1,728 in early Asian hours on Friday, losing about 9% of its value in the last 24 hours. A sudden plunge to a similar price level on Thursday night was raised by traders, but this morning's decline was gradual.

Price charts point to support at current levels and resistance at $1,900, which acted as key support earlier this month. Similar prices were previously recorded in July 2021, and a loss of this level could see Ether fall into the $1,300 to $1,500 range or lower.

A major reason for the decline could be the lack of demand for Ethereum blocks, according to data from analytics firm Glassnode. Prices for "gas," or network fees, have been trending downward since December and recently hit multi-year lows, the firm said in a note earlier this week.

Block space is the amount of transaction data that can be contained in each block, for which users pay "gas" fees. Lower block demand usually means a drop in user activity on a given network.

Analytics firm Coinalyze shared in a Twitter message that Ether's volatility was followed by a sudden spike in open interest in Ether futures on Thursday. Open interest is the amount of open futures in a market, and a spike in the number usually means traders are opening long or short positions in anticipation of a move.

Ether and other major cryptocurrencies appeared to be stabilizing at the time of publication. However, futures and options data for Bitcoin suggest that traders are bracing for a bearish phase.