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Attention for Ethereum! Institutions Take Precautions for "This Price" Against the Decline! - Coin Bulletin
Ethereum (ETH) price volatility has increased institutional investors' demand for bearish protection against the risk of liquidation of leveraged long positions.
Ethereum (ETH), which fell 11% in the last 24 hours to below $2,380, then recovered over 4% to regain attention in the market. This sharp move by Ethereum, the second-largest asset in the cryptocurrency markets, has raised concerns about the medium-term outlook among institutional investors.
Increasing demand for "Downside Hedging" from institutional investors
CF Benchmarks Product Director Thomas Erdösi pointed out the changes in open positions in Chicago Mercantile Exchange (CME) Ethereum options, stating that institutional investors took positions against the decline. Erdösi said, "Between February 18-24, we particularly saw a significant increase in open positions targeting the $2,000 level in March futures ETH options".
Erdösi emphasized that investors are increasing their hedging positions near the $2,000 level and at the same time exiting call options at levels as high as $7,000. This revealed that the market has reduced the expectation of a strong uptrend and a more cautious approach has been taken.
Liquidity risk is growing
According to Biget Wallet COO Alvin Kan, on-chain data shows that three major MakerDAO positions will face liquidation risk if the Ethereum price falls to $1,926, $1,842, and $1,793. Kan said, 'Potential MakerDAO liquidations of $340 million indicate that the recent selling pressure in Ethereum has put leveraged long positions in a difficult situation.'
Kan also noted that $296 million has already been liquidated from Ethereum positions, which could trigger forced selling. However, according to Kan, the market does not need to paint a completely negative picture. "If buyers step in or liquidity stabilizes, we could see a rapid recovery in the market," he said, adding that the market's future movements will depend on the speed of deleveraging and the strength of spot demand.