Eth Price Drop To $3k Sets Stage For $7b Short Squeeze If Crypto...
ETH’s flash crash to $3,050 cleared out $1.3 billion in leveraged long positions, creating a market imbalance with $7 billion in short liquidity. Will a short squeeze send ETH above $4,000?
Ether dipped to $3,055, wiping out $1.3 billion in long liquidations across exchanges.
Over $7 billion in short positions near $4,000 sets up potential for a sharp squeeze.
A hidden bullish divergence suggests a potential bottom around $3,000.
Ether (ETH) price dropped to $3,055 on Tuesday, extending its weekly decline by over 13%. The move cleared out liquidity from the equal lows near $3,400, a zone that had attracted heavy leverage buildup. The next major liquidity pocket now sits between $3,000 and $2,800, levels that have previously acted as long-term structural supports.
On Binance, over $39 million in long positions were liquidated during this correction, the largest since Oct. 10. Across the market, total long liquidations have surpassed $1.3 billion, resetting the derivative landscape and creating a significant imbalance between long and short positions.
On the weekly chart, Ether has cycled through the four classical market stages this year: decline, accumulation, markup and distribution, according to CryptoQuant.
During the decline phase, ETH broke below multiple Anchored Volume-Weighted Average Price (AVWAP) levels, the dynamic support and resistance lines that measure the average price buyers paid from specific starting points. The drop under key AVWAPs anchored from the Trump Election Victory, first all-time highs (ATHs) of 2021 and 2024, and the July 2020 candle confirmed a seller-controlled market.
Following this, ETH entered a 10-week accumulation phase between $2,000 and $3,000 before rallying through those same AVWAPs during its markup stage to reach an August yearly high. However, the recent distribution phase showed buyers losing control as ETH compressed between the AVWAPs from the ATH and $3,800, then broke lower on high volume early this week.
Currently, ETH is testing long-term AVWAP supports again, suggesting that the correction may be nearing exhaustion.
Source: CoinTelegraph
