Whale Injects $14M in Ether to Avoid $340M Liquidation Amid Market Slump

A major cryptocurrency whale recently took drastic action to prevent the liquidation of a $340 million short position on MakerDAO, a leading decentralized finance (DeFi) lending platform. Amid the recent downturn in the crypto market, marked by significant macroeconomic pressures and the announcement of tariffs by former President Donald Trump, the whale made an emergency deposit of 10,000 Ether (ETH) — worth over $14.5 million — along with 3.54 million Dai (DAI). The deposit was made to raise the liquidation price of the whale's substantial 220,000 ETH position, which had been in danger of liquidation if Ether’s price fell below $1,119.3.

Liquidation Threat and Market Slump

According to blockchain analytics firm Lookonchain, the whale's short position was perilously close to liquidation due to the recent plunge in Ether's price. If the price of ETH had dropped to around $1,119, the 220,000 ETH position would have been liquidated, causing a potential loss of more than $340 million. This emergency action by the whale was a necessary step to safeguard the position, as the broader crypto market continues to grapple with volatility and investor fear.

Source: Lookonchain

The whale's actions come shortly after another significant liquidation event on the decentralized finance platform Sky, where an investor lost more than $106 million due to a similar market downturn. Sky, like many other DeFi platforms, relies on an overcollateralization system, typically requiring a 150% collateralization ratio for users to borrow DAI against ETH. The system was unable to shield investors from the market's sharp correction, as Ether and other cryptocurrencies suffered a notable price drop on April 6, when Ether saw a 14% crash, leading to the loss of more than 67,000 ETH for the whale involved.

Widespread Market Liquidations

The crypto market is facing widespread liquidations, with data from CoinGlass revealing that over 446,000 positions were liquidated in just the past 24 hours. The total losses from these liquidations have surpassed $1.36 billion, including $1.21 billion from long positions and $152 million from short positions. The largest single liquidation reported was a $7 million Bitcoin (BTC) position on the crypto exchange OKX.

This sharp market decline follows the announcement of reciprocal import tariffs by U.S. President Donald Trump on April 2, which sent shockwaves through both traditional and digital markets. The S&P 500, for instance, suffered its largest two-day drop on record, with a staggering $5 trillion in losses. However, crypto analysts are now turning their attention to the potential for recovery, despite the turbulent environment.

Crypto market liquidations, 24-hours. Source: CoinGlass

Tariff Announcement and Future Market Outlook

The announcement of tariffs has added to the uncertainty that has plagued global markets over the past few months. Michaël van de Poppe, founder of MN Consultancy, suggested that the tariffs are a manifestation of the prevailing uncertainty and may mark the peak of this turbulent period. With the new playing field now set, van de Poppe believes that this “Liberation Day” could open the door for a shift in investor sentiment.

As the uncertainty related to the tariffs begins to subside, there is growing speculation that traditional investors will start rotating into crypto markets, viewing digital assets as undervalued following the recent market correction. Crypto intelligence firm Nansen has even estimated a 70% chance that the crypto market may bottom out by June, depending on how the ongoing tariff negotiations and global economic conditions evolve.

The emergency action by the whale and the broader liquidation events underscore the heightened risks in the crypto market amid macroeconomic challenges. As the market tries to recover, many investors are watching closely to see if the bottom has been reached or if further volatility lies ahead.