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Ethereum falls below $4,000... leveraged liquidations and shutdown fears compound
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- Ethereum (ETH) fell below the psychological support of $4,000, recording its lowest level in about two months.
- The plunge was attributed to large-scale leveraged liquidations combined with macroeconomic uncertainties such as the possibility of a U.S. government shutdown and a slowdown in inflows to spot ETFs.
- In the derivatives market, long position liquidations and a decrease in open interest were evident, with selling far outpacing buying.
- The article was summarized using an artificial intelligence-based language model.
- Due to the nature of the technology, key content in the text may be excluded or different from the facts.
Ethereum (ETH) fell below the $4,000 level, which had been considered a psychological support. On the 25th (local time), Ethereum slid to $3,815 on Binance, marking its lowest level in over two months.
The sharp drop was driven by large-scale leveraged liquidations. According to Forbes that day, Joe DiPasquale, CEO of BitBull Capital, said in an email, "When the $4,000 support broke, a cascade of leveraged liquidations occurred," adding, "More than $300 million in long positions were liquidated in 24 hours."
DiPasquale said the decline was the result of multiple factors rather than a single cause. He explained, "Macroeconomic anxieties, such as the possibility of a U.S. government shutdown, increased risk-aversion," and "the slowdown in inflows to spot Ethereum ETFs revealed weakened institutional demand. Forced selling, macro uncertainty, and weakened inflows combined to create a perfect storm."
Julio Moreno, head of research at on-chain analytics firm CryptoQuant, highlighted a 'deleveraging' phenomenon in the derivatives market. He said via Telegram, "Today's price decline appears to be caused by moves to reduce positions in the perpetual futures market," adding, "Sell orders are outpacing buy orders by the largest margin in two months."
He added, "Open interest has decreased by $1 billion over the past 24 hours," and "this shows that long position liquidations are continuing."
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