The price of Ethereum’s native token, Ether (ETH), careened below $1,000 on June 18 as the ongoing sell-off in the crypto market continued despite the weekend.
Ether reached $975, its lowest level since January 2021, losing 80% of its value from its record high in November 2021. The decline appeared amid concerns about the Federal Reserve’s 75 basis points rate hike, a move that pushed both cryptocurrencies and stocks into a strong bear market.
“The Federal Reserve has barely started raising rates, and for the record, they haven’t sold anything on their balance sheet either,” noted Nick, an analyst at data resource Ecoinometrics, warnings that “there is bound to be more downside coming.”
Ethereum’s implosion continues
Investors and traders have been anxiously watching Ether’s price in recent days, fearing a decisive breakdown below $1,000 would trigger the forced liquidations of massively leveraged bets. In turn, that would put more downside pressure on Ethereum.
The fears appear due to Babel Finance and Celsius Network, a pair of crypto lending platforms that halted withdrawals citing market volatility.
They intensified further after Three Arrow Capital, a crypto hedge fund managing $10 billion worth of assets as of May, failed to shore up its collateral to cover pungent bets. This came less than a month after Terra, a $40 billion “algorithmic stablecoin” project, collapsed.
These events have coincided with a massive capital withdrawal from Ethereum’s blockchain ecosystem. The total value locked (TLV) unwind occurred in two parts. First, Ethereum’s TVL across DeFi projects fell by $94 billion after the Terra debacle in May and then by another $30 billion by mid-June.
“The deleveraging event that is underway is observably painful, and is akin to a form of mini-financial crisis,” noted CheckMate and CryptoVizArt, a pair of analysts at Glassnode, an on-chain analytics…
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