Ethereum is showing a big decline because derivatives based on Ethereum are in crisis.

As of the 13th, Bitcoin prices are at their lowest point in two years. The current price is around $25700. This price is similar to December 2020. The price that hadn’t collapsed for about a year and a half has collapsed. 바이비트 수수료 Ethereum prices, the second-largest virtual currency market capitalization, plunged more than 30% over the weekend. All cryptocurrency prices fell, but the price drop of Ethereum, a major class, was especially large. Ethereum led the virtual currency plunge. Let me tell you what happened to Ethereum, which is the second largest market capitalization after Bitcoin.

Investors affected by Ethereum’s sudden fall are saying, “It’s a subprime crisis from Ethereum,” and “I was farming interest with Ethereum, but it was devastated by the storm.”

As Ethereum (ETH) has fallen sharply over the weekend, cryptocurrency investors are concerned that a second Luna crisis may be recreated. Ethereum, which maintained the 2.3 million won level on the 10th alone, has fallen by 30% in three days, maintaining the 1.78 million won level as of the 13th. The last time Ethereum was in the 1.78 million won range was about a year and three months ago. Compared to Bitcoin’s decline of about 20% over the weekend, Ethereum’s fall was greater.​

Ethereum’s fall is reminiscent of the “death spiral” that led to the Luna crisis. Ethereum-related loan services, which have been doing business based on interest payments, are embroiled in concerns over “bank run.” Some analysts say that Ethereum-related loan products are on the verge of following in the same footsteps as Luna. If the liquidation of these products continues, Ethereum prices could fall even further. However, some predict that it is different from the Luna period in that the cause of the decline is not Ethereum’s own problem.

Ethereum is showing a big decline because derivatives based on Ethereum are in crisis. Ethereum is preparing to switch from mining coins to non-mining coins. After the upgrade, Ethereum holders participate in the verification of the blockchain and additionally pay Ethereum as compensation to those who participated.

Participation in validation requires a minimum of 32 dirium, making it difficult for individual investors to participate. Based on this, companies such as Lido are providing services similar to crowdfunding. It is a method of collecting small amounts of Ethereum from individuals and participating in verification work instead to receive profits and distribute them again. Since Ethereum’s system cannot be found until the upgrade is completed, companies such as Lido will issue stETH, a receipt for Ethereum.

Meanwhile, Celsius, a service company that lends loans as coin collateral, recently provides a service that lends about 70% of Ethereum as collateral when seETH is entrusted using Ethereum entrusted by other investors. Investors can also borrow Ethereum from Celsius with stETH that they received in exchange for trading with Ethereum or entrusting Ethereum to companies such as Lido, and leave it to companies such as Lido again. In this case, the interest rate can be maximized.

The problem arises here. As Celcius’ loan service became popular, Celcius had most of the Ethereum in the form of stETH. If customers find Ethereum that they entrusted at once (bank run), they can be in a state of inability to pay. As investors concerned about this try to change stETH to Ethereum before others, stETH prices continue to fall and are not exchanged 1:1 with Ethereum. This is similar to depegging of Stablecoin. This is exactly what happened during the Terra crisis.

If stETH prices continue to fall, investors who borrowed Ethereum could also liquidate their collateral. As a result, the “death spiral” that makes stETH enter the market more and eventually accelerates the price drop could be reproduced following the Terra crisis.

The exact size of the loan from the lender Celsius has not yet been revealed, but considering that the size of stETH, a kind of derivative securities issued by companies such as Lido, will reach 6.34 trillion won, the impact of the successive liquidation of stETH will be very large.

The U.S. Consumer Price Index (CPI) rose 8.6 percent, the largest increase in 40 years, due to global inflation factors caused by the Russian and Ukrainian wars. This is a big factor that causes the U.S. Federal Reserve to tighten its budget, and the Federal Reserve has already announced that it will raise its key interest rate by 0.5% for the next three consecutive times.

Austerity in the United States is likely to bring about a recession in the market.

Among them, the Luna crisis, in which the Luna and Terra ecosystems, which were created by Korean Kwon Do-hyung and had a market capitalization of tens of trillions, are almost suspended overnight, is also playing a big role.

No one can easily predict how long the downturn in the cryptocurrency market will continue in the future.

In this situation, it is necessary to be careful to enter the long position of buying in kind or futures if possible. Rather, it may be wise to enter the futures short position whenever a big rebound occurs.