ETH Price Plunges Below $4K: Devastating Ethereum Liquidation Rocks the Market

The cryptocurrency market often delivers swift and unexpected movements. Recently, a significant shift in the ETH price caught many off guard. Ethereum, the second-largest cryptocurrency by market capitalization, recently dipped below the critical $4,000 threshold. This move triggered a chain of events, culminating in one of the largest single-trader liquidations seen in recent times. For those closely following the crypto space, understanding these rapid changes and their impact is crucial for navigating volatile conditions.

Massive Ethereum Liquidation Rocks the Market

A dramatic event unfolded as Ether price slid below $4,000. On Thursday, an Ethereum trader faced a staggering $36.4 million liquidation. This significant loss stemmed from a massive long bet that went south quickly. The wallet, identified as “0xa523,” had staked 9,152 ETH, anticipating a price increase. Instead, the market moved against the position, leading to a complete wipeout of the investment.

Following this devastating liquidation, wallet “0xa523” now holds a mere $500,000. Its total realized losses have climbed to over $45.32 million. This substantial sum led blockchain analytics firm Lookonchain to label the entity as Ethereum’s “biggest loser.” Such events highlight the extreme risks associated with highly leveraged positions in volatile markets.

This single liquidation did not occur in isolation. It formed part of a broader $331.66 million long squeeze. This market event punished numerous bullish traders over the past 24 hours, according to data from CoinGlass. This week alone, Ethereum traders have suffered over $718 million in long liquidations. In stark contrast, short liquidations amounted to only $79.62 million. During the same period, Ether’s price declined by 10.56%, demonstrating significant selling pressure.

ETH/USD four-hour price chart. Source: TradingView

Understanding the ETH Breakdown and Market Structure

The recent price action indicates a significant ETH breakdown from a key chart pattern. Analyzing the daily chart, Ethereum confirmed a breakdown from a symmetrical triangle pattern. This setup typically signals a bearish reversal, especially after a strong uptrend. This move shifts the immediate bias to the downside. Consequently, further losses for Ether price appear likely in the short term.

Technical indicators now point to specific downside targets. The next significant level sits near the 0.382 Fibonacci retracement level at $3,595. This represents a potential drop of around 10% from current levels. Furthermore, this downside target aligns with a crucial support zone. The $3,600–$3,400 area, highlighted by ETH’s Volume Profile (VPVR), reinforces this projection. It also overlaps with ETH’s 200-day exponential moving average (200-day EMA; the blue wave) near $3,392. This confluence of indicators suggests the price could drop by 15% in a worst-case scenario. This potential sell-off could gain momentum into October if market conditions do not improve.

ETH total liquidations chart. Source: CoinGlass

Key Liquidation Zones and Potential Rebound for Ether Price

CoinGlass’s liquidation heatmap offers further insights into market dynamics. It clearly highlights a significant build-up of leverage between $2,370 and $2,500. Therefore, if ETH continues its downward trajectory, many long positions will likely face liquidation in this range. This scenario could intensify selling pressure before the market finds a bottom. Traders must monitor these levels closely.

Conversely, a large cluster of short positions sits between $4,760 and $5,000. If ETH price rebounds to these levels, short sellers will encounter trouble. They could face forced buy-backs, which would further drive prices higher. This dynamic creates potential for a significant short squeeze if bullish momentum returns. The market remains highly sensitive to these critical price points.

ETH/USD three-month liquidation heatmap. Source: CoinGlass/HyperLliquid

Expert Perspectives: A Comprehensive Crypto Market Analysis

Popular analyst Kamran Azghar has identified around $3,600 as a “key demand” zone. He suggests that the Ether price might rebound from this level, potentially targeting $4,900 or even higher. This perspective offers a glimmer of hope amidst the current bearish sentiment. Such demand zones often act as strong psychological and technical barriers against further price declines.

Meanwhile, analyst Cold Blood Shiller observed Ethereum’s weekly chart. It showed price retesting a crucial horizontal support zone between $3,800 and $4,000. This area previously acted as resistance during the 2022–2023 cycle. A successful defense of this level would significantly strengthen the case for bullish continuation. It would effectively turn former resistance into new support, a classic bullish reversal signal. Therefore, if ETH bulls successfully defend the $3,800–$4,000 levels in the coming days, a rebound toward the $4,760–$5,000 cluster remains possible. Many bullish analysts have highlighted this cluster in the past as a critical upside target. The confluence of these technical observations provides a robust framework for understanding potential future movements.

ETH/USD daily price chart. Source: TradingView

Navigating the Volatility: Future Outlook for ETH Price

The recent market movements underscore the inherent volatility within the cryptocurrency space. The sharp decline in ETH price, coupled with significant liquidations, serves as a stark reminder of the risks involved. While the immediate outlook appears bearish, key technical support levels and analyst insights provide a nuanced perspective. Traders and investors must remain vigilant and conduct thorough research. They should monitor crucial demand and resistance zones. This proactive approach helps in making informed decisions. The market could see further consolidation or even a deeper correction. However, the potential for a rebound from established support levels remains a possibility. The interplay of technical indicators and market sentiment will ultimately dictate Ethereum’s next major move. This ongoing crypto market analysis will continue to evolve as new data emerges. Readers should remember that this article does not contain investment advice or recommendations. Every investment and trading move involves risk. Therefore, readers should conduct their own research when making any financial decisions.