Ethereum Whale Liquidated for $106M as ETH Drops to $1,482 in Market Crash

YEREVAN (CoinChapter.com) — An Ethereum whale lost 67,570 ETH, valued at around $106 million, during a sharp drop in ETH price on April 6, 2025. The Sky liquidation occurred as the value of ETH dropped 14%, triggering the liquidation process on the DeFi lending platform, Sky.

Sky, formerly known as Maker, allows users to create debt positions by locking up ETH to borrow DAI stablecoin. The system uses an overcollateralized model. Users must deposit at least 150% of the borrowed DAI’s value in ETH. This model protects the system from volatility. However, the Ethereum whale saw their position liquidated when the collateral ratio dropped to 144%, below the required level.

Lookonchain and DeFi Explore confirmed the liquidation. The asset was automatically sold to repay the borrowed DAI and fees.

DeFi Lending Platform Sky Triggers ETH Liquidations

When the ETH price crashed, it triggered the automatic liquidation process on the Sky platform. Sky is a DeFi lending platform, which means it lets people borrow money using their cryptocurrency as a deposit or guarantee. In this case, users deposited ETH (Ethereum) to borrow DAI, a digital dollar-like token called a stablecoin.

Sky follows a rule called overcollateralization. This means users must deposit more ETH than the DAI they want to borrow. For example, to borrow 100 DAI, a user needs to deposit at least 150 dollars’ worth of ETH. This is to make sure there’s enough backup if ETH prices drop.

If the value of ETH goes down too much, and the user’s deposit is no longer enough to cover their loan, Sky automatically steps in. It seizes or takes the user’s ETH and sells it to repay the loan. This sale is called a liquidation. After the debt and any fees are paid off, if any ETH is left, Sky sends it back to the user.

This system helps protect the platform and the people lending their money. But it also puts pressure on ETH prices, because large amounts of ETH are sold on the market during these liquidations.

Another Ethereum whale is now close to liquidation. Spot On Chain reported that the user deposited 56,995 wrapped ETH, worth nearly $91 million, as collateral to borrow DAI. Wrapped ETH is a version of Ethereum that works on platforms using token standards like ERC-20. If ETH price continues to fall, the user’s position will hit the liquidation threshold, and the platform will automatically sell the collateral to repay the debt.

Because DeFi lending platforms like Sky depend on the price of ETH staying strong, sharp price drops can cause many accounts to get liquidated at once. That pushes even more ETH onto the market, causing more selling and price drops.

ETH Crash: Price Drops to $1,482 as RSI Falls to 15.48 on April 7

At the time of writing on April 7, 2025, ETH price dropped to $1,482.58 on Coinbase, marking its lowest level since October 2023. That previous low came during the extended bear market following the FTX collapse.

This drop came during a broader crypto market crash, partly triggered by U.S. President Donald Trump’s new tariff announcement. The news caused a sharp sell-off across global markets, affecting both traditional finance and cryptocurrencies.

Over the past four hours, ETH declined by 3.91%, based on the  data from TradingView. The Relative Strength Index (RSI) fell to 15.48, deep in oversold territory. This level reflects strong short-term selling pressure. Meanwhile, the 50-period Exponential Moving Average (EMA) stood at $1,796.41, showing that the current ETH price is far below the recent trend.

ETH is now trading 68% lower than its all-time high of nearly $4,878 from November 2021. The price drop has pushed many DeFi users closer to liquidation, especially those who used ETH as collateral to borrow stablecoins like DAI.

In DeFi lending platforms, users lock up ETH to receive loans in stablecoins. These loans are based on a collateral ratio—users must deposit more value in ETH than they borrow. When the ETH price falls sharply, this ratio can drop below safe levels. If that happens, the system automatically sells the ETH to repay the loan. This process is known as liquidation.

To stop liquidations, users must either repay part of the loan or add more ETH to raise their collateral ratio. If they do not, the platform sells their ETH, which increases the selling pressure and pushes the price down further.

$898M in Liquidations Hit Crypto Market, Mostly from Long Positions

According to CoinGlass, the crypto market saw $898 million in liquidations over the past 24 hours. Most of the liquidated positions were long trades, where traders had expected prices to rise. Instead, as prices dropped sharply, systems automatically closed these positions. That triggered widespread liquidations and added more pressure to the falling market.

The data reflects a major shift in market conditions between April 6 and 7, when cryptocurrencies, especially Ethereum, saw sharp declines. These drops triggered forced selling across trading platforms. While multiple assets were affected, ETH-related positions saw some of the highest liquidations․

Short positions—bets that prices will go down—saw fewer liquidations by comparison. This suggests that most traders were expecting a price recovery or continuation of the previous trend. The price reversal and sudden drop caught many off-guard, triggering automated sell-offs.