When Crypto Goes 🤯: Justin Sun’s Ethereum Warning

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Oh, hello there! You might want to sit down for this one. Justin Sun, the crypto billionaire who founded Tron, has just dropped a bombshell on the Ethereum community. It seems that Ethereum has a little bit of a leverage issue, and it’s not the good kind of leverage that makes your bank account grow, unfortunately.

Justin Sun 🗣️ Talks About Ethereum’s Leverage Problem

According to Sun, Ethereum is facing a major problem with traders using way too much leverage when they trade ETH on both centralized and decentralized platforms. In a tweet, he warned that this could cause serious losses for DeFi projects and protocols on the Ethereum network in the short term.

Sun urged the Ethereum team to address this issue before it gets out of hand and suggested that they “resolve some of the leverage” instead of waiting for it to blow up in their faces. He even recommended a “negotiated solution,” which sounds like a fancy way of saying “let’s talk this out like adults.”

Ethereum’s Leverage Problem 📈 Grows Rapidly

The issue that Sun raised refers to the fact that traders have been using excessive leverage in ETH-based trading, particularly in derivative markets such as options and perpetual futures. Some traders have been using up to 50x (or even 100x!) leverage when trading ETH on large platforms. This leads to a high risk of liquidations when price volatility spikes.

Another factor contributing to this problem is the widespread use of ETH as collateral in various Ethereum-based DeFi protocols. When leverage becomes too high, a sudden drop in ETH price may cause mass liquidation of loans, which could strengthen bearish pressure on the market.

And if that wasn’t enough, when leverage gets too high, it can lead to funding rates surging and in turn, drive traders to start shorting ETH. This could cause market corrections and make things even more volatile.

A commentator chimed in, sharing data that shows Ethereum’s leverage currently stands at 5-10x on $50 billion in exposure, which represents roughly 11-14% of its $440 billion market cap. Daily liquidation volumes have already risen to $50-$70 million, indicating active trading based on leverage. Yikes!

Ethereum 📉 Rebounds After 15% Crash

In other news, over the past 24 hours, Ethereum experienced a massive 15% crash, dropping to $1,811 earlier today. But fear not, dear reader, for ETH has since rebounded by 6% and is currently trading at $1,920 per coin. Phew, what a relief!

Ethereum followed in Bitcoin‘s footsteps, mirroring its fall below the $80,000 level on Monday and the subsequent rise. It’s like watching a rollercoaster ride, but with digital currencies instead of actual rollercoasters. 🎢

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2025-03-11 15:06