Five Years After the March 12th Crash… The Liquidation Crisis Returns: “The Battle of the Whales Begins”

# Crypto Market Faces Steep Declines, Reminiscent of 312 Crash On March 12, 2020, the cryptocurrency market experienced a dramatic collapse known as the "312 incident." Amid the global financial turmoil triggered by the COVID-19 pandemic, Bitcoin plummeted by approximately 50% in a single day, and Ethereum also faced significant losses. The cascade of on-chain liquidations further exacerbated the market panic. Five years later, the market is once again facing a downturn reminiscent of the 312 incident. According to CoinGecko, the total market value has fallen to $2.66 trillion, with Bitcoin dropping below $80,000 and Ethereum slipping under $2,000. Concerns over a potential U.S. economic recession and broader macroeconomic uncertainties are cited as major contributing factors. # Ethereum Faces Rising Liquidation Threats; Whales Step In Ethereum, in particular, is at a high risk of large-scale liquidations. As Ethereum's price declines, collateral held in services like MakerDAO (formerly known as Sky), which provide loans using Ethereum as collateral, is at risk of being liquidated. Data from DeFiLlama indicates that if Ethereum falls to $1,830, approximately $124.5 million worth of liquidations could occur. Should it drop further to $1,793, an additional $111.1 million in collateral might be liquidated. On the 11th, Ethereum briefly dipped below these critical levels. However, since each service uses different price benchmarks and some time is required for liquidations to occur, immediate liquidations were avoided. Nonetheless, continued price drops could significantly increase liquidation pressures. In efforts to avoid liquidations, some whales have been selling assets to manage their positions. According to PANews, a whale address holding large loans on Aave (0xa33...e12c) sold 25,800 ETH to lower their liquidation threshold, incurring a leverage loss of $31.75 million. Whales on MakerDAO faced similar pressures but benefitted from the OSM (Oracle Security Module) mechanism, which delayed price updates, allowing them time to provide additional collateral. Summer.fi data shows that one whale holding 67,000 ETH (approximately $124 million) at address 0xab...2313 sold 2,882 ETH (around $5.21 million DAI) before the oracle price update on the 12th at 10 a.m., thereby lowering the liquidation price from $1,798 to $1,781. Another address (0x22...1246) deposited 30,098 ETH (approximately $56.08 million) into MakerDAO to lower its liquidation price as a defensive strategy. # Whales’ Survival Strategies; The Market Outlook Currently, the cryptocurrency market operates under a “survival is success” mentality. A prominent trader remarked, "The crypto market has transitioned from a 'winner’s game' to a 'loser’s game,' emphasizing the importance of minimizing risks and surviving the market turmoil.” The market’s future direction will likely hinge on U.S. economic indicators and broader macroeconomic factors. Notably, the U.S. Consumer Price Index (CPI) data set to be released on the 12th (local time) is expected to be a crucial variable influencing investor sentiment. Attention is now focused on whether the market will rebound following the CPI announcement or face further liquidations. As of this writing, Ethereum is trading at $1,912, up 1% from 24 hours ago.