Ethereum Hit by Largest Liquidation Cascade Since 2021, $1.53B in Leveraged Positions Wiped Out

Market Context

This recent cascade follows a period of relatively smaller liquidations over the past few days. With many traders highly leveraged, especially on long bets, any sharp negative movement triggers chain reactions. The broader crypto market is sensitive to macroeconomic news, rate expectations, and sentiment. Ethereum’s drop underscores how vulnerable leveraged long positions can be in volatile markets.

Technical Details with Attribution

• Approximately 1.53 billion USD in leveraged positions were liquidated across the crypto market in a short span. ETH long positions alone contributed about $900 million of that. 
• Over 404,000 traders were liquidated, many forced out of long positions in ETH and other altcoins.
• DeFi and lending liquidations also rose: roughly $22 million in crypto loans where ETH or WETH were used as collateral were erased.
• ETH slipped under $4,200 during the turmoil but managed some bounce back. Key levels being watched for resistance are around $4,400; on the downside, some expect it could test $4,100 in a downside scenario.

Analyst Perspectives 

Analysts consider this liquidation event a wake-up call for heavily leveraged traders. Many see it as a reset: long positions were flushed, weak hands likely got forced out. However, some caution that markets often overreact in these cascades, and recoveries can be sharp if sentiment shifts or positive news arrives. They warn that further downside remains possible if open interest remains high and support levels falter.

Global Impact Note

Because Ethereum is a core asset in many global DeFi applications, liquid staking protocols, and collateral systems, a cascade like this can have ripple effects: lending protocols may see collateral shortfalls; traders locked into perpetuals or futures may face margin calls; and investor confidence could dip. Globally, this encourages a rethink of risk management in crypto exposure—especially exposure to leverage.