Ethereum Battles $3,200 Support as $200M Liquidation Wave Hits Network Despite Record Transaction Activity
Ethereum (ETH) is worth about $3,200 right now, which is 2.8% less than it was 24 hours ago. This is because a huge liquidation cascade hit
Quick overview
- Ethereum's price has dropped to about $3,200, a 2.8% decrease in the last 24 hours due to a significant liquidation cascade in the crypto markets.
- The liquidation event resulted in over $514 million in long positions being wiped out, with Ethereum accounting for more than $200 million of that total.
- Despite the short-term pessimism in price, Ethereum's network fundamentals show a rise in daily transactions, reaching an all-time high of nearly 2.8 million.
- Technical analysis indicates that Ethereum's next critical support level is around $3,100, with potential for significant price movement depending on market conditions.
Ethereum ETH/USD is worth about $3,200 right now, which is 2.8% less than it was 24 hours ago. This is because a huge liquidation cascade hit the crypto markets on January 19. The second-largest cryptocurrency by market value was caught in a market-wide deleveraging event that wiped out more than $514 million in long positions in only one hour. Ethereum was responsible for more than $200 million of the forced selling.
The big drop happened when Bitcoin BTC/USD fell 3% to $92,500. This caused the rest of the crypto market to fall 2.79% and the Fear & Greed Index to drop from 49 to 45, which showed that traders were becoming less willing to take risks. Ethereum’s high correlation with Bitcoin, which is now at 0.89, meant that when Bitcoin fell, it put pressure on the altcoin markets to sell.
ETH Whale Activity and Derivatives Tension Signal Volatility Ahead
A well-known whale address made $1.83 million in profit from Ethereum short positions launched three days before the sell-off, which added to the gloomy mood. The same trader then went all in on a $30 million Bitcoin short with 40x leverage, which means that institutional players are getting ready for more losses.
But there are signs of rising stress in the derivatives market that may go either way. Ethereum’s 24-hour open interest jumped 20.43% to $649 billion, which shows that there is more activity in the futures and options markets. This concentration of leveraged positions, which can be as high as 100x, makes it possible for prices to move violently in either direction because traders who use a lot of leverage are at risk of losing their money quickly.
The liquidation cascade produced a feedback cycle that made things worse. When Ethereum broke through important support levels, automatic position closures caused further selling, which drove prices down and caused even more liquidations. This mechanism explains why there was so much derivative activity during the 2.8% drop.
Ethereum Network Fundamentals Paint Contrasting Picture
The short-term market movement is still pessimistic, but the underlying network metrics for Ethereum paint a very different tale. Daily transactions just hit an all-time high of almost 2.8 million. This is 64% more than the peak of the bull market in 2021. This rise in on-chain activity shows that people are really using decentralized financial protocols, stablecoin settlements, and other apps, not just speculating.
The fact that the price is going down while the utility is going up shows how complicated Ethereum is. Vitalik Buterin, one of the protocol’s co-founders, recently said that the protocol is becoming more and more difficult to work with as developers add new features but rarely remove old ones. Buterin asked for a “garbage collection” function to make the codebase easier to read and less dependent on complicated cryptographic primitives. He said that too much complexity makes trustlessness and self-sovereignty weaker.
ETH/USD Technical Outlook: Critical Support Zone in Focus
From a technical point of view, Ethereum’s next struggle will be at the $3,100 level, which is the 38.2% Fibonacci retracement. The three-week candlestick timing shows that ETH’s market capitalization is staying above the 21 exponential moving average and following a rising macro trendline. This is a positive sign that ETH is reaccumulating in a larger upswing rather than distributing.
Egrag Crypto, a crypto expert, says that in the past, when Ethereum stayed above this EMA, it was a sign of expansion, and when it broke below it for a long time, it was a sign of a bear market. The current structure makes it more likely that the price will keep going up. If overhead resistance breaks, the price might go up by 70–75%. On the other hand, losing the 21 EMA would confirm a deeper decline of 25–30%, but this seems less plausible given the way the market is set up right now.
Bitcoin’s ability to stabilize and Ethereum’s ability to protect the psychologically crucial $3,000–$3,100 zone will have a big impact on the price in the near future. Traders should keep a close eye on derivatives financing rates because a move from negative to positive would show that more people are becoming bullish and there is a chance of a short squeeze because of the high open interest levels.
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