The cryptocurrency market recently witnessed heightened volatility, with Ethereum (ETH) experiencing a sharp sell-off that resulted in a rapid price decline to the $3,050 threshold. This sudden downturn triggered a massive cascade of forced closures of leveraged positions, specifically leading to the liquidation of approximately $1.3 billion in highly leveraged long contracts. As the market attempts to stabilize and ETH's price inches toward recovery, it is now confronted with a significant technical hurdle: a colossal concentration of short liquidity, estimated at $7 billion, densely positioned around the critical $4,000 price mark. This substantial resistance zone indicates significant selling pressure from traders who have bet on a price decrease, suggesting that any sustained upward movement will face an immediate and severe challenge at this psychological and technical barrier, reports The WP Times with reference to Telegram.
The scale of the $1.3 billion in liquidations underscores the high risk associated with trading cryptocurrencies using excessive leverage, as margin calls were triggered rapidly when the price flashed down. Now, the battle for the $4,000 level is pivotal. The enormous $7 billion "short wall" represents a vast pool of potential sell orders and stop-loss levels. If the price manages to absorb this selling pressure and push above $4,000, it could signal a strong bullish reversal and trigger a short squeeze. Conversely, failure to overcome this resistance would likely lead to further price consolidation or another downward move, emphasizing the importance of the $4,000 psychological resistance in determining Ethereum's near-term trajectory.
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