Ethereum is under intense selling pressure and has recorded a sharp 28% decline since last Friday, when its price decisively lost the psychological $3,000 level. What initially seemed like a controlled pullback quickly escalated into one of the most aggressive downward moves in recent months, reflecting a sudden shift in market sentiment and risk appetite in the crypto space.
On January 31, the Ethereum market experienced a major capitulation. ETH ($2,313.74) fell from above $3,000 to the $2,350 zone within hours, marking one of the steepest single-day corrections in this cycle. The speed and scale of the measure indicate forced sales rather than orderly distribution. As the price fell, a dense cluster of stop-loss orders and liquidations emerged, reinforcing the downward momentum and overwhelming liquidity on the bid side.
This rapid collapse almost immediately ended weeks of bullish positioning. Traders who had positioned themselves for continuation above $3,000 were caught offside. This is leading to a broad reset in derivatives exposure and sentiment. The psychological impact of losing such a widely viewed level further intensified the sell-off, reinforcing risk-taking behavior in both the spot and futures markets.
As Ethereum stabilizes below previous support, investors are now reassessing whether this move represents a temporary breakout or the early stages of a deeper corrective phase. The coming sessions will be critical in determining whether demand can reemerge after this violent reset.
Market-wide deleveraging is restoring Ethereum’s derivatives landscape
A CryptoQuant analyst explains that recent on-chain data confirms that Ethereum’s sell-off was caused by a market-wide leverage flush rather than organic spot distribution. According to the Ethereum Long Liquidations (All Exchanges) chart, total liquidated long positions rose to approximately $485 million, marking the second largest liquidation event since October 10.
These spikes force a reset of the derivatives market by quickly unwinding overloaded positions after an extended period of risk build-up.
However, a closer look reveals an important difference. When comparing global liquidation data to the Binance (All Symbols) chart, Binance only recorded around $40 million in long liquidations during the same move. This means that Binance accounted for less than 10% of the total global liquidations. Despite being one of the largest derivatives platforms in terms of volume. This imbalance indicates that other exchanges focused on excessive leverage and aggressive risk-taking, leading to much more severe liquidation cascades.
This discrepancy implies that traders on Binance were either less congested or had stricter risk management. This allows them to resist the sharp downward movement more effectively. Other platforms, on the other hand, were hit hardest by forced deleveraging.
From a broader perspective, this kind of long squeeze tends to purge speculative excesses. While this is painful for bullish positioning, it often sets the stage for stabilization as the market searches for a new equilibrium. Monitoring open interest and funding rates outside of Binance will be critical, as the main drivers of volatility clearly originate outside the ecosystem.
Price falls as bearish momentum accelerates
Ethereum’s price structure has deteriorated sharply, and the chart shows how decisively the market has shifted to a bearish regime. After failing to reclaim the $3,000-$3,200 zone multiple times, ETH collapsed aggressively, cutting through previous support levels with little resistance. The recent move below $2,400 marks a clear extension of downward momentum rather than a controlled pullback.
From a trend perspective, ETH is trading well below its short- and medium-term moving averages, with the 50-day and 100-day MAs now acting as dynamic resistance. The downward trend of these averages increases the likelihood that sellers will focus on rallies rather than extending them. The 200-day moving average, which is much higher, confirms that the broader structure has turned away from a bullish trend.
Volume behavior adds another layer of concern. The sell-off towards $2,300 was accompanied by higher volume, indicating forced selling and capitulation rather than organic distribution. This trend is consistent with recent liquidation data and indicates that the market has been aggressively wiping out debt.
In the short term, the $2,300-$2,200 zone is a crucial area to watch. It represents the first meaningful support after the collapse. If we fail to stabilize here, it would open the door to deeper retracements. The chart suggests that the path of least resistance continues to go down.
Featured image of ChatGPT, chart from TradingView.com
#Ethereum #Experiencing #Broad #Long #Push #Derivatives #Exchanges #Bulls #Hold #BitRss #Crypto #World #News