Ethereum (ETH) has been under pressure lately as it dropped about 13% in one day to trade at $1064 and is also on the verge of a huge selloff if it plummets further to $1016.
As big lenders liquidate positions, the massive selloff will be triggered by the liquidation of Three Arrows Capital.
If the ETH price falls to $1016, the wallet address Three Arrows Capital on Nansen faces a $264 million liquidation risk. It is actively repaying the AAVE loan.
Ethereum (ETH) price to slip to $1016 if Three Arrow liquidates
According to Onchain Wizard, a wallet on Nansen known as Three Arrows Capital has been paying off its debt on AAVE V2 to escape the liquidation of its 223k ETH valued at roughly $264 million. However, if ETH price goes below $1016, the collateralized stake will be liquidated. The wallet has a total debt of $198 million in USDT and USDC, with an 85% liquidity threshold.
The address repays the debt with USDT and USDC and withdraws ETH. Thereafter, Three Arrows Capital uses “sinofate.eth” to convert ETH to USDT or USDC and repays the debt on Aave V2. In fact, in the last 24 hours, the address has sold approximately 50,000 ETH.
Furthermore, Three Arrows Capital is liquidating its stETH holdings in favor of ETH to repay its debt amid harsh market conditions. Due to Lido’s stETH depeg with the ETH, the hedge fund is one of the largest holders of stETH facing financial difficulties. As the date of the Ethereum Merge remains uncertain, Three Arrows Capital has decided to remove stETH.
Zhu Su, the co-founder of Three Arrows Capital, has taken to Twitter to calm the situation that has arisen as a result of liquidation risks. He stated, “
“We are in the process of communicating with relevant parties and fully committed to working this out.”
The Price of Ethereum Could Drop Following the FOMC Meeting
The price of Ethereum (ETH) could drop even more at the FOMC meeting, as the Federal Reserve is expected to raise interest rates by 75 bps. Presently, the price of ETH is dragging downhill, having dropped 6% in an hour.
Both Ethereum and Bitcoin are in grave danger of falling below $1000 and $19,000, respectively. The price of ETH could drop to $750, while the price of BTC is projected to drop to $13,000.