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You Can Arbitrage Ethereum (ETH) If This Happens

Wed, 09/07/2022 - 11:59
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Arman Shirinyan
Investors might receive serious profits if Ethereum makes this unexpected move
You Can Arbitrage Ethereum (ETH) If This Happens
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Despite a spike in liquidation volume on the cryptocurrency market, the second biggest network in the industry has not faced any problems heading into the last week ahead of the Merge update. But things may change if the price plunges to $1,348.

According to DeFiLIama, there are $167 million worth of stETH at risk of liquidation at $1,348. Compared to spot-based Ethereum futures, the liquidation level is almost two times higher.

In case of a liquidation, $167 million worth of tokens will be injected onto the market, creating enormous pressure on stETH, which will certainly cause a decoupling from the price of spot ETH assets. Such conditions can be used for arbitrage trading.

Source: DefiLIama

With an immediate spike in selling pressure, the price of the token might plunge far lower than Ethereum's price on the market. In order to take advantage of it, traders might start buying stETH at a lower price and then sell their regular ETH holdings, making an immediate profit, considering the high possibility of stETH returning to the same level as the spot asset.

One way or another, the liquidation might not happen at all if the price of the second biggest cryptocurrency market plunges to the aforementioned price all of a sudden. Investors and traders can always additionally fund their positions, pushing the liquidation price even lower and avoiding the crash.

Ethereum on Proof-of-Stake: Comprehensive Guide to The Merge

In addition to financial reasons that may help the market avoid the cascade of stETH liquidations, the price of the spot assets might also avoid such a rapid and unexpected spike in selling pressure, considering its previous performance on the market.

At press time, Ethereum is trading at $1,512 and showing a mild 3% correction in the last 24 hours.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.