Despite a recent recovery in cryptocurrency prices, Ethereum lending markets have experienced a surge in liquidations during the first two weeks of April, reaching levels not seen since June 2022.
Following a sharp selloff, Ethereum lending protocols Aave and Compound have witnessed significant liquidations, with nearly $80 million and $50 million, respectively, according to data from The Block’s data dashboard. This surge marks the highest monthly volume in years, despite April being only halfway through.
The last time Ethereum lending markets saw a higher volume of liquidations was in June 2022, following the collapse of the $40 billion Terra ecosystem. The recent crash in the price of CRV also heightened liquidation risks, with Curve founder Michael Egorov’s loan at risk, as reported by Colin Wu. While Egorov managed to avoid liquidation, he expressed intentions to reduce exposure in response to market volatility.
Traders and lenders alike have faced increased liquidation risks as bullish bets soured amid Bitcoin’s decline from its recent all-time high. CoinGlass data reveals that crypto liquidations have totaled nearly $1.7 billion in the last three days, primarily affecting bullish positions.
The surge in Ethereum loan liquidations underscores the inherent risks associated with crypto lending and trading, emphasizing the importance of robust risk management strategies in navigating volatile market conditions.