Ethereum Slides After $592M Liquidations Surge Now

Introduction

Ethereum experienced pronounced volatility this week as a volatile mix of forced liquidations, macro signals and protocol upgrades pushed price and volume sharply in both directions. After a strong early-December rally tied to the Fusaka upgrade and positive ETF flows, ETH gave back gains when nearly $592 million in liquidations rippled through leveraged positions and risk appetite wavered on cautious central bank commentary. The net result: ETH trading in the high-$2,000s and market participants recalibrating positions amid a growing supply squeeze on exchanges.

Major Drivers Behind the Moves

Forced Liquidations: The Immediate Shock

Midweek saw roughly $592 million liquidated across crypto derivatives, a wave that disproportionately affected long and leveraged positions and intensified downward pressure on ETH. The liquidation cascade forced stop-losses and margin calls, amplifying sell-side volume in a compressed timeframe. The speed and size of these liquidations pushed ETH down nearly 7% from intraweek highs to roughly $2,900, demonstrating how concentrated leverage can quickly turn a rally into a sharp drawdown.

Macro Signals: Fed Caution and Risk Appetite

Sentiment was further dented by a less accommodative tone from the Federal Reserve. Market expectations for imminent rate cuts were tempered, reducing the risk-on flows that had helped fuel the initial uptrend. That macro backdrop proved sufficient to sap momentum, turning modest profit-taking into deeper retracements whenever technical support was tested.

Fusaka Upgrade and ETF Flows: The Underlying Bull Case

Earlier in the week, Ethereum’s upside was driven by the rollout of the Fusaka upgrade, which increased block gas limits and eased transaction costs on Layer 2s — a structural improvement that encouraged on-chain activity and investor confidence. Simultaneously, spot ETF inflows turned positive, and exchange balances of ETH fell to multi-year lows. Those developments suggested accumulation and a tightening of available sell-side supply, a constructive backdrop that remains intact despite short-term turbulence.

Whale Positioning and Supply Dynamics

Institutional and whale behavior reinforced the supply-side narrative. Significant holders reduced exchange exposure and increased long positioning, while staking and DeFi locked-up balances approached about 40% of circulating ETH. Centralized exchange reserves sank to under 9% of outstanding supply — a material contraction compared to earlier in the year — which historically supports higher price floors as liquid inventory dwindles.

Technical Picture and Trading Ranges

Immediate Support Levels

Technically, ETH held trend support near $2,900 after the liquidation-induced sell-off. A deeper support band sits in the $2,820–$2,830 area, often referenced by market-value metrics as a zone where realized losses compress and buyers historically emerge. A decisive break below these zones could open extended downside toward lower structural hubs closer to $2,500.

Resistance and Path to Re-acceleration

The nearest meaningful resistance cluster lies around $3,095–$3,200. Reclaiming and sustaining above this band on robust volume would validate the earlier breakout and reinstate the bullish case that targets higher milestones. Conversely, thin volume on a bounce would favor range-bound action and longer consolidation.

Volume Patterns and What Traders Should Watch

Volume dynamics were notable: the initial Fusaka-inspired breakout coincided with a notable uptick in trade volumes (roughly 30–40% above recent averages), while the liquidation phase produced concentrated spikes in derivatives activity. Traders should watch ETF flow data, exchange reserve charts, and on-chain metrics like net inflows to L2s and staking rates — these indicators have been reliable early signals of directional conviction in recent weeks.

Conclusion

This week’s price action underscores a central theme: Ethereum’s medium-term fundamentals are improving (protocol upgrades, shrinking exchange supply, institutional interest), but near-term moves remain vulnerable to liquidity shocks and macro headlines. The balance between a tightening supply base and episodic forced selling will determine whether ETH can reclaim the $3,100–$3,200 zone and resume a sustained advance, or whether it retreats to lower support for further digestion. Traders and allocators should prioritize execution discipline, monitor leverage across derivatives, and track ETF/flow data as the next set of catalysts unfolds.