The first month of 2022 has not been the best for the second largest cryptocurrency in the market
- Clearance sequence
- Decrease in open interest
Following the major correction in the cryptocurrency market, Ethereum and other large-cap coins faced heavy selling pressure which, in the case of Ether, led to a rapid drop from $3,200 to $2,500.
As Ethereum lost up to 30% of its previously earned value, the market was hit with an unpleasant record of the largest liquidation streak in Ethereum’s history.
1/ As a major correction took ETH down from $3.2000 to $2.5000 last week, on-chain liquidations surged as positions began to reach their liquidation point.
Last Friday, money markets on ETH saw their biggest liquidation event yet, amounting to over $200 million. pic.twitter.com/Pel0GtYUDQ
—Delphi Digital (@Delphi_Digital) January 24, 2022
According to data provided by Delphi Digital, Ethereum money markets have seen liquidations amounting to over $200 million. As the research firm reports, the highest liquidation volume was seen on MakerDAO.
The decentralized platform charges a liquidation penalty if the user’s vault value collateral reaches its liquidation price. The scheme theoretically allows the platform to earn money from liquidations that appear on the platform.
Decrease in open interest
In addition to the heavy liquidation volume hitting the markets, Ethereum futures, options and other derivatives saw a sharp decline in open interest after early hints of a rate hike in the US. future from the Fed.
Open interest in Bitcoin and Ethereum futures fell to $6 billion and $3 billion, respectively, after peaking in November. Open interest in Ethereum futures remains at around $10 billion in mid-November, as the second-largest cryptocurrency traded at around $4,200.
At press time, Ethereum is trading at $2,440 following the 12% rebound from yesterday’s low. Since the all-time high, Ethereum has lost half of its previously gained value and is now trading at the July level.