ETH plunges 7%: Liquidation wave and institutional accumulation in the long-short battle

Ethereum experienced a significant decline in the past 24 hours, dropping from a high of $3397.90 to $2964.12, a decrease of 7.01%. This downturn is not an isolated event but the result of multiple forces colliding, including derivatives market liquidations, increased institutional allocations, and abnormal whale behaviors. Currently, ETH is at a critical $3000 level, with bulls and bears engaged in intense tug-of-war, and short-term volatility may further intensify.

Liquidation Wave Intensifies Downward Pressure

Chain reaction in the derivatives market

In the past 24 hours, the total liquidation across the entire network reached $335 million, with Ethereum long positions liquidated at $114 million, far exceeding the $4.45 million in short liquidations. This highly asymmetric liquidation data directly reflects the fragility of bullish positions in the market.

According to liquidation data, if ETH continues to decline to the $2952 level, the cumulative liquidation of major CEX long positions could reach $807 million. This means that breaking through this support level could trigger a larger chain of liquidations, creating a clear downside risk exposure.

Well-known traders’ unrealized losses expand

During this decline, several well-known traders such as Huang Licheng, Maji Dage, Machi, and others have faced consecutive liquidations. On-chain monitoring shows that Trend Research currently holds 626,700 ETH, with unrealized profits narrowed to approximately $61.7 million, indicating that even professional institutions with high leverage are under significant pressure.

Support from Bottom-Level Buying Power Remains

Institutional-level holdings show signs of increased accumulation

Contrasting the liquidation pressure, entities like BitMine and other treasury companies continue to expand their ETH holdings. The latest disclosed holdings amount to 4.203 million ETH, and they have been authorized by shareholder meetings to increase the maximum issuance of shares, providing financing space for further ETH accumulation. This accumulation behavior under price pressure signals institutional confidence in ETH’s medium- to long-term value.

Staking activity hits record highs

The proportion of staked Ethereum has reached a historic high, accounting for nearly 30% of circulating supply, with about 36.2 million ETH locked in staking. Notably, the market has over 2.6 million ETH queued for staking, while the redemption queue remains relatively limited. This structure indicates that, despite price pressure, holders maintain confidence in the network’s long-term participation.

Clear Market Sentiment Divergence

Contradictory whale behaviors

Two very different whale behaviors have emerged during this decline. On one hand, several whales panic-sold a total of 5,000 ETH at high prices, worth over $16 million. On the other hand, a “buy low, sell high” whale has been continuously accumulating during an 11-hour period, averaging $3233 per ETH and building a position of 12,200 ETH, reflecting strong willingness to absorb at the bottom.

This divergence highlights differing market opinions on the future outlook. Swing traders previously sold 10,000 ETH at an average of $3321, realizing a profit of $1.51 million, while short-sellers’ unrealized gains are also expanding, indicating short-term downward pressure.

Derivatives market sees bulls and bears in stalemate

On-chain position battles show bulls and bears engaged in a tug-of-war around the $3000 level. Data indicates that if derivatives short liquidations reach above $3200, the scale could hit $1-1.6 billion, suggesting significant resistance above.

Balancing Risks and Opportunities

The main short-term risk is that leveraged longs could trigger a chain reaction of liquidations. If ETH falls below the $2952 support, the liquidation of $800 million worth of long positions could further intensify downward pressure.

However, on-chain fundamentals and institutional enthusiasm for accumulation provide important support for prices. The record high staking activity and increased institutional holdings indicate that the medium- to long-term outlook remains optimistic. Macro variables like Trump’s Davos speech could serve as catalysts for subsequent sharp volatility.

Summary

ETH’s current predicament is a confrontation between short-term technical pressure and medium- to long-term fundamental support. The liquidation wave has indeed exerted significant downward pressure on prices, but signals such as increased institutional accumulation, record-high staking, and whale bottom-fishing suggest that support levels are still intact. The market is at a critical juncture of bulls and bears vying for control, with the $3000 level being the most important recent support. Short-term volatility may further increase, but based on on-chain accumulation activity, market sentiment towards ETH’s medium- and long-term prospects remains not overly pessimistic.