After a rollercoaster ride for more than two months, the crypto market has now found some stability trying to hold on to the recovery phase.
Even then, the global crypto market has slumped by 3.34% over the last 24hrs, positioned at $912.59 Billion. Along with Bitcoin, even Ethereum is trading red with a drop of 3.31% and 2.97% over the last 24hrs respectively.
As Ethereum and other cryptocurrencies are being hit with such selling pressure, FTX, a centralized exchange could be one of the biggest reasons. This is because FTX is funding traders who have agreed to lend their coins in exchange for a high APY (Annual Percentage Yield).
This kind of strategy often creates huge selling pressure on any assets which are already in a tough time trying to climb and maintain a bull run.
Particularly, FTX is funding its users who are ready to take their Ethereum, which is then given to the exchange’s short sellers. Any of such loans will devalue any assets and this time it is Ethereum.
More Selling Pressure Ahead?
Here the interest rate depends upon the demand for long and short assets on the Platform. For instance, when Terra (LUNA) crashed along with UST stablecoin, FTX offered nearly 18,000% APY to anyone who invested some LUNA which can be used for shorting later.
Anything of such will ignite a sell-off phase in the market because too much selling volume will be seen. This is because short traders will be of the opinion that if they get high APY it is always better than giving more pressure on an already struggling asset.
The same happened with LUNA, as the asset’s value dropped to 0. This might be the case with any assets that step into such a danger zone and that will get even worse with platforms like FTX.
Earlier, it was also seen that wallets that were connected with the FTX exchange, had received millions worth of Ethereum in a very less time frame. This indicates that there will be more selling pressure adding up in the coming days.
Other than this, the decreased inflows along with buying power on Ethereum and other cryptocurrencies are two main reasons that are stopping ETH Price from getting into the recovery phase.
At the time of reporting, Ethereum is trading at $1,145 with a drop of 3.08% in the last 24hrs.
Was this writing helpful?
Link del artículo original
Si el presente artículo, video o foto intrigue cualquier derecho de autor por favor señálelo al correo del autor o en la caja de comentarios.