While Meta grapples with its own financial woes, the world of cryptocurrency is also experiencing tremors. Ether (ETH), the second-largest cryptocurrency by market capitalization, faces potential instability in the coming weekend. According to a report, over $510 million worth of Ethereum long positions could be liquidated if the price experiences similar volatility to what was seen last weekend.

Here’s a breakdown of the situation:

• Weekend Wobbles: Ether’s price has exhibited a pattern of weekend volatility in recent weeks. On April 13th, it dipped nearly 9%, and on April 20th, it briefly dropped by 2.25%. While the price typically recovers during the week, these swings can trigger liquidations for investors holding leveraged long positions.
• Long and Liquidated: When an investor takes a long position, they are essentially betting that the price of the asset will go up. Leverage allows them to amplify their gains, but also magnifies potential losses. If the price falls below a certain point, known as the liquidation price, the investor’s position is automatically sold to prevent further losses. This can lead to a cascading effect, further driving down the price.
• $510 Million on the Line: Data from CoinGlass suggests that a price drop of just 2.25% from Ether’s current price (as of April 20th, 2024) could trigger a wave of liquidations, wiping out over half a billion dollars in long positions. This could exacerbate the price volatility and create uncertainty in the Ethereum market.
• SEC and Spot ETF Woes: Adding to the jitters is the ongoing speculation about the US Securities and Exchange Commission (SEC) potentially rejecting a spot-based Ether ETF application next month. A spot ETF would allow traditional investors to gain exposure to Ether’s price movement without directly buying the cryptocurrency. Rejection by the SEC could dampen investor sentiment and contribute to price swings.

Also, read – Your Ultimate Guide To The Cross Chain AI Hub With Ethereum

What to Watch Out For in Ethereum:

Investors and traders should closely monitor Ethereum’s price movements in the coming weekend. If the price exhibits similar volatility as seen in previous weekends, it could trigger liquidations and further price drops. Additionally, any news regarding the SEC’s decision on the Ether ETF could impact market sentiment.

The Takeaway:

The potential for significant liquidations highlights the inherent risks associated with leveraged trading in volatile cryptocurrency markets. While Ether has the potential for high returns, investors should be aware of the downside and manage their risk exposure carefully.