Ethereum has dropped below $1,600 for the first time since April, exposing a major pressure zone within decentralized finance. Right now, over 343,000 Ether—valued at roughly $547 million—sit near critical liquidation thresholds in DeFi lending markets. The largest clusters of risk are concentrated just below current levels, with key marks at about $1,566 and $1,555.
In DeFi lending protocols, borrowers use Ether as collateral to secure loans, typically in stablecoins. If ETH loses value and falls below required buffers, the protocol can automatically liquidate that position—selling collateral to repay debt. That means a further drop in ETH does not just reflect selling pressure; it can create new selling pressure as collateral is forcibly sold into a weakening market.
Supporting market data shows that even after a wave of liquidations and lower open interest, long positioning is still elevated. That means some risk has cleared, but not enough to rule out more forced selling if prices keep falling.