Ethereum Price Surge Triggers $1.7 Billion Short Liquidations: More Losses Ahead for ETH?

Key Insights

• $500 million worth shorts positions liquidated on Binance

• $1.7 billion in total shorts positions liquidated

• ETH is down 1% over the last 30 days

Ethereum’s price recovery to $2.5k has significantly impacted the derivatives market, triggering a cascade of short liquidations worth over half a billion dollars on Binance with a $1.7 billion in total across exchanges. This marks one of the largest liquidation surges in recent months, underscoring the risk amid rising volatility. 

Ethereum short liquidations surge, reaching nearly 700K as the price experiences volatility near the $2.51K mark, highlighting increased market movements.

Ethereum Short Sellers Crushed

After Ethereum prices retraced, investors started going short, anticipating further price decline. Thus, traders betting on continued downside flooded the market with short positions, leveraging against what they assumed was another leg lower for Ethereum. But as ETH began to recover, these trades started to get liquidated. 

ETH experiences a dramatic $500 million short squeeze on Binance, highlighting significant liquidations in the market.

As prices pushed higher, margin calls kicked in. Short positions were forcefully liquidated. This attempt to cover drove prices even higher in a classic feedback loop, a liquidation spiral where forced exits only fuel more pain for bears.

 Read also: 140k ETH leave exchanges

When too many traders pile onto the same side of a trade, especially with borrowed capital, it becomes a powder keg. In Ethereum’s case, the bearish crowd had grown so dense that even a modest recovery sparked a chain reaction.

And once that reaction started, over $500 million in shorts were liquidated on Binance while $1.7 billion worth of shorts were liquidated across exchanges. Funding rates flipped positive, a clear sign that bullish sentiment was taking hold as demand for long positions surged.

Surging Ethereum Flows to Derivatives Exchanges

Fueling this volatility is a marked uptick in Ethereum inflows to derivatives platforms. Since June 13, massive transactions each exceeding 30,000 ETH have flown into exchanges. These flows often signal a shift in strategy among whales and institutions.

Ethereum exchange netflow graph shows significant ETH deposits exceeding 30,000 ETH each, marked by green spikes, alongside fluctuating price movements on derivative exchanges.

This flows into exchanges, indicating that some traders may be protecting existing spot positions by opening short hedges, especially with ETH approaching resistance levels. On the flip side, these inflows may represent ammunition for fresh short bets, particularly if ETH stalls below major price ceilings. If so, renewed downward pressure could follow.

Is ETH Set for More Gains?

Ethereum price chart showing a recent decline in value to $2,515, with notable fluctuations and trading volume at 56.17K ETH. The RSI indicator is displayed below, indicating momentum and potential trends.

While ETH’s current rebound may cool off slightly to stabilize funding rates, the market remains primed for volatility. Therefore, if traders use their fresh ETH inflows to lean heavily into new shorts, we could see another buildup of risk and potentially, another squeeze.

But if those flows turn defensive or aim at hedging long exposure, the market could gain footing for a more sustained rally.

A sustained rally from the current levels will see Ethereum break out of $2.8k resistance and eye $3k. Equally, if the risk in the leverage market intensifies, another correction will see ETH drop to $2.4k.