Ethereum’s (ETH) Ticking Time Bomb: $340M Liquidations or Short Squeeze?

Ethereum’s (ETH) Ticking Time Bomb: $340M Liquidations or Short Squeeze?

TLDR

• Three MakerDAO positions worth $340 million combined face liquidation if ETH drops below $1,900
• ETH has dropped over 11% to $2,390 in the past 24 hours, with $296 million already liquidated on exchanges
• Over $2 billion in ETH shorts risk liquidation if ETH price reaches $3,000, potentially triggering a short squeeze
• Ethereum is forming a monthly hammer candlestick pattern similar to Bitcoin’s pattern before its 2021 rally
• An Ethereum ICO whale recently sold 9,092 ETH worth approximately $24.5 million, retaining only 1,024 ETH

Ethereum (ETH) has fallen 11.5% in the past 24 hours to around $2,390, putting it on a path toward potential large-scale liquidations while simultaneously setting up conditions for a possible short squeeze if prices reverse course.

Data from on-chain analytics platforms shows three major MakerDAO positions, collectively worth $340 million, now face liquidation if ETH’s price drops below key thresholds. These positions will trigger liquidations at $1,926, $1,842, and $1,793 respectively, with each position valued between $109 million and $126 million. For these liquidations to occur, ETH would need to fall another 19% from current levels.

The recent price drop has already caused $296 million worth of ETH positions to be liquidated on centralized exchanges in just the past day, according to data from CoinGlass. This comes as part of a market-wide sell-off affecting not only cryptocurrencies but also global equities.

ETH’s current price represents a 42% decline since December 16, a steeper drop than typically seen even in bull market corrections, which usually max out around 30% before resuming upward momentum. These pullbacks often serve to remove over-leveraged positions from the market.

On the opposite side of the spectrum, Exchange Liquidation Map data reveals a large accumulation of short positions that would face liquidation if ETH’s price moves upward instead. Reports indicate more than $2 billion in ETH shorts would be liquidated if the price reaches $3,000.

Short Squeeze?

This creates a situation where a price surge could trigger a “short squeeze” – a rapid price increase caused when short sellers must buy ETH to cover their positions as they get liquidated. Such events can lead to sharp upward price movements as buying pressure compounds.

Technical analysts point to an interesting pattern forming on Ethereum’s monthly chart. ETH appears to be developing a hammer candlestick formation similar to what Bitcoin displayed before its major rally in 2021. If this pattern completes and holds, it could signal bullish momentum ahead.

The comparison to Bitcoin’s 2021 price action suggests ETH could potentially target the $4,800 level, near its previous all-time high resistance from 2021, before possibly advancing toward $16,000 if following a similar percentage-based rally. However, if this pattern fails to complete and the monthly candle turns negative, ETH might test support levels around $2,150.

ICO Whale Selling

Adding another factor to the market equation, an original Ethereum investor from the 2015 ICO (Initial Coin Offering) has recently moved substantial funds to exchanges, likely for selling.

This “whale” deposited 3,046 ETH worth approximately $8.16 million to Kraken, following another transfer of 6,046 ETH worth about $16.34 million the previous day, according to blockchain monitoring service EyeOnChain.

Another Ethereum ICO Whale Cashing Out!
An old-school $ETH whale from the ICO era just deposited 3,046 ETH ($8.16M) to Kraken 10 hours ago. His cost basis? Just $0.31 per ETH! 🤯

In the past 24 hours, he’s sold a total of 6,046 ETH ($16.34M). Now, he’s down to his last 1,024 ETH pic.twitter.com/K7mQKDDlup

— EyeOnChain 🔶 (@EyeOnChain) February 25, 2025

What makes this move especially eye-catching is the investor’s cost basis of just $0.31 per ETH, representing an enormous profit despite recent market downturns. After these transactions, the investor reportedly retains only 1,024 ETH from their original holdings.

Large sell-offs from early adopters can sometimes prompt market concerns, as they may be interpreted as lack of confidence from insiders who have been in the ecosystem since its beginning. However, profit-taking after such massive gains is also a normal investment practice.

The upcoming trading sessions will prove crucial for determining ETH’s next major move. Market participants are closely watching whether the price will continue its downward trajectory toward the MakerDAO liquidation levels, or if it will reverse course and potentially trigger the short squeeze by approaching $3,000.

The next few days will be key for determining whether ETH follows the bearish path toward liquidations or if it can mount a recovery that would put pressure on the accumulated short positions. Either scenario could lead to heightened volatility in the short term.

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