Logic Analysis of the Crash:
1️⃣ "ETH Circular Lending" is the Trigger
Some institutions or large holders use ETH as collateral to borrow stablecoins (such as USDe, DAI, etc.), then use the stablecoins to buy more ETH, and continue to use it as collateral for lending, creating a circular leveraged position.
When ETH rises, the profits are magnified;
When ETH falls, the risks are also magnified.
2️⃣ ETH Price Drops → Collateral Begins Liquidation
After the ETH price drops, the health factor of these circular positions deteriorates, triggering automatic liquidation.
In the past 24 hours, it is estimated that hundreds of thousands of ETH have been liquidated, which is a very high on-chain selling pressure.
3️⃣ Liquidation Triggers a Chain Reaction
A large amount of ETH is sold → ETH spot price further drops → Altcoins based on ETH (for example, ETH/ALT pairs) also drop together.
Market makers, in order to balance risks and hedge positions, are also forced to sell ETH and related assets, further amplifying the decline.
4️⃣ ETH Continues to Drop → More Positions Liquidated
At this point, a circular effect occurs: the more the price drops, the more liquidations happen, and the liquidations continue to push the price down.
On-chain funds begin to show panic withdrawals.
5️⃣ USDe is Impacted
USDe relies on the hedging mechanism with ETH and the futures market to maintain its peg.
However, due to the sharp drop in the spot market and the depletion of futures liquidity, the hedging fails → unable to close positions quickly enough, leading to a depeg.
6️⃣ USDe Depegs → Panic Redemptions
Holders worry that the price of USDe will continue to drop, so they rush to redeem. During the redemption, they need to withdraw ETH and then sell the ETH, which further drives down the ETH price.
This creates a negative feedback loop of ETH dropping → USDe depegging → ETH dropping again.
7️⃣ Market Maker Funds are Squeezed
In this round of liquidation and depeg, market makers' liquidity is drained, the Order Book depth decreases, slippage intensifies, and price volatility is further amplified.
In Summary
This is actually a typical systemic risk cycle in the #DeFi space:
ETH price drops → Liquidations increase → Liquidity decreases → Stablecoin depegs → Panic redemptions → ETH continues to drop. $eth #暴雷 #关税 $btc
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