Ethereum’s $4,000 Plunge Liquidates Long Positions - Here’s What’s Next
Ethereum just turned bullish optimism into bearish reality. The second-largest cryptocurrency continues its downward spiral, systematically dismantling long positions that accumulated beneath the critical $4,000 threshold.
The Great Unwinding
Traders who bet big on Ethereum maintaining its momentum above $4,000 are getting crushed. The market's moving like a wrecking ball through over-leveraged positions—proving once again that crypto markets have zero sentimentality about wiping out speculative excess.
Technical Breakdown
Ethereum's price action isn't just dipping—it's attacking specific liquidity zones where traders clustered their long positions. This isn't random volatility; it's targeted destruction of overconfident leverage. The $4,000 level transformed from support to resistance in a brutal reversal that caught many off guard.
Market Psychology Shift
Remember when everyone was convinced $4,000 was the launchpad to new highs? The market has a funny way of humbling consensus trades. Now we're watching real-time as 'can't lose' positions become liquidation fuel.
Wall Street's favorite narrative—institutional adoption will prevent major drawdowns—looks about as reliable as a 2017 ICO whitepaper. The crypto markets continue their beautiful, chaotic tradition of separating the disciplined from the delusional.
Spot buying continues as whales buy the dip on ETH
The recent flushing of long positions is often viewed as a deliberate move, a mix of whale activity, aggressive traders, and large-scale market makers.
During the downturn, ETH whales were back to their usual behavior, acquiring reserves of spot ETH. The ethereum project is still seen as key for decentralized finance and eventual mainstream adoption, hence the long-term confidence.
During the market downturn, 10 new whale wallets acquired 201K ETH, as seen by on-chain analysts.
Whales are aggressively buying $ETH now.
Today, 10 new wallets have bought 201K ETH worth $855 million from exchanges and OTC.
This often happens when ETH is getting closer to a bottom. pic.twitter.com/EUBMXE5cwZ
— ZYN (@Zynweb3) September 25, 2025
At the same time, Wintermute almost depleted its ETH reserves, retaining 5K tokens after active transfers to centralized markets and DEX.
Is ETH done with the losses?
Bearish predictions see ETH dipping as low as $3,700 before shifting its direction. For others, the $3,900 support level is the turning point, following the removal of long liquidity at that range.
One of the signs for the shift is the liquidation of short positions. Following the dip under $4,000, traders started attacking short positions, causing $4.5M in liquidations within an hour.
Additionally, the long liquidations showed a trading profile that suggested a short-term dumping of ETH. The biggest share of the day’s liquidations happened within the four-hour window, during Asian trading hours.
Recent wallet flows show Binance increased its stablecoin reserves to a new high, while ETH and other tokens flowed in from the Wintermute market maker. Similar transactions happened during the market downturn at the end of August.
The loss of long positions has not caused market capitulation for now. However, ETH may take weeks to rebuild liquidity and reclaim previous levels. A breakout to $4,580 is seen as a resistance level before a more confident bull market.
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