Lido Staked Ethereum (stETH), a key factor in the ongoing crypto crash, widened its gap with Ethereum, falling below $1,000 on Wednesday.

stETH fell to just $959.77, before rebounding to just over $1,000 in a broader crypto market recovery. The move also appeared to have liquidated some Ethereum positions, with approximately $51 million liquidations in the past four hours.

Collateralization of stETH by beleaguered lender Celsius and hedge fund Three Arrows Capital was a major reason behind the token’s role in the ongoing crypto crash.

A drop in the value of stETH caused the positions of Celsius and Three Arrows to be liquidated, forcing the two to dump their positions in the open market.

sETH de-pegging still a threat

Although the token has now recovered to above $1000, any further losses in stETH still pose a threat to crypto markets. Using it as collateral when borrowing ETH is the main source of uncertainty.

While both Celsius and Three Arrows are taking steps to lower their liquidation levels, smaller holders on major DeFi platforms are being hit the hardest by liquidations.

Celsius appears to have added even more collateral for a $500 million position on Maker. For now, the lender appears to have reduced the potential for a liquidation.

Still, a Federal Reserve rate hike later on Thursday could potentially lead to more crypto losses.

Ethereum Liquidations Rise, But Markets Stabilize

Data from Coinglass shows that approximately $51 million of ETH positions have been liquidated in the past four hours – nearly twice as many as Bitcoin’s. This came as ETH prices approached a key liquidation level for Three Arrows.

But the level – $1,014 was not breached and ETH recovered slightly after the dip. Traders are now looking for a more sustained uptrend.

While stETH has no direct correlation with ETH prices, the observed de-pegging had caused panic selling of ETH over the past two days. A slowdown in the planned merger also confused ETH traders.

With over five years of experience in global financial markets, Ambar plans to leverage this knowledge for the fast-growing world of crypto and DeFi. His main interest lies in finding out how geopolitical developments could affect crypto markets and what that could mean for your bitcoin holdings. When he’s not scouring the internet for the latest news, you can play him video games or watch Seinfeld reruns. You can reach him at [email protected]

The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or the publication is not responsible for your personal financial loss.

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