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Main takeaways:
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Ether dipped to $3,055, clearing $1.3 billion in long liquidations on exchanges.
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More than $7 billion in short positions near $4,000 creates a potential for a tight squeeze.
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A hidden bullish divergence suggests a potential bottom around $3,000.
ether (ETH) the price fell to $3,055 on Tuesday, extending its weekly decline by more than 13%%. The move lifted liquidity from the same lows near $3,400, an area that had attracted a sharp rise in leverage. The next major liquidity bulwark now lies between $3,000 and $2,800, levels that previously acted as long-term structural supports.
On Binance, more than $39 million in long positions were liquidated during this correction, the largest since October 10. Across the market, total long liquidations exceeded $1.3 billion, resetting the derivatives landscape and creating a significant imbalance between long and short positions.
A review of the market stages for ETH in 2025
On the weekly chart, Ether has cycled through the four classic market stages this year: decay, accumulation, marking and distribution, according to CryptoQuant.
During the decline phase, ETH broke below several Anchored Volume-Weighted Average Price (AVWAP) levels, the dynamic support and resistance lines that measure the average price that buyers pay from specific starting points. The fall below the key AVWAP anchored by Trump’s Electoral Victory, the first all-time highs (ATH) of 2021 and 2024, and the July 2020 candle confirmed a seller-controlled market.
After that, ETH entered a 10-week accumulation phase between $2,000 and $3,000 before rallying through these same AVWAPs during its marker stage to reach an August year high. However, the recent distribution phase showed buyers losing control as ETH compressed between the AVWAP from the ATH and $3,800, then broke lower on high volume earlier this week.
Currently, ETH is retesting the long-term AVWAP supports, suggesting that the correction may be close to exhaustion.
Related: Bitcoin and Ether ETFs bleed as Solana quietly pulls in ‘curious capital’
The ether short-squeeze installation is formed
With more than $7 billion in short position liquidity clustered around the $4,000 level, the current drop in ETH has primed the market for a potential short squeeze. If price momentum reverses near the $3,000 support, even a modest recovery could trigger cascading liquidations of over-leveraged shorts, accelerating a rebound.
Adding to the bullish setup, the daily chart of ETH shows a hidden bullish divergence between the price and the Relative Strength Index (RSI), where the price forms lower lows while the RSI holds equal lows, often signaling a trend reversal.
However, the Crypto trader Daan Trades said,
“$ETH has completely declined from that previous cycle high and is now back in that $2.8K-$4.1K range. Good chance this will hit before another volatility spike.”
Related: Ethereum wipes out its gains 2025: ETH price headed to $2.2K next?
This article does not contain investment advice or recommendations. Every investment and business move involves risk, and readers should do their own research when making a decision.
