Ethereum's Super-Liquid Derivatives Market Collapse: How a Liquidation Storm Swallowed Billions in Long Positions

When Ethereum breaks below a key support level, the derivatives market feels like a hole has been punched through it. According to the latest data, as of press time, ETH trading price is approximately $3.12K, up 0.59% in the past 24 hours, but this rebound momentum is far from enough to heal the previous wounds.

Liquidation Wave Erupts: Derivatives Market Descends into Chaos

Ethereum’s recent decline was not sudden, but the speed caught many leveraged traders off guard. When the price fell from $3,400 to around $3,000, the entire ultra-liquid derivatives ecosystem instantly plunged into chaos.

Based on on-chain data tracking from CoinGlass, spot trading volume surged 53.5% to $87.15 billion, while open interest plummeted over 55% to $37.67 billion. This contradictory data signals that many holders are hurriedly exiting rather than building new positions.

The surge in liquidation numbers is even more shocking. On December 15, daily liquidation reached $196 million, and the next day increased by another $58 million. Long positions suffered the most, with total liquidations exceeding $213 million during this adjustment.

Whales Battle in the Ultra-Liquid Market, Losses Break Records

A whale operating on the Hyperliquid platform exemplifies this crisis. Allegedly, this entity (marked as “BitcoinOG” on Arkham) had converted Bitcoin positions into Ethereum during the recovery phase in April and built a long position worth up to $700 million.

As the price dropped below $3,000, unrealized profits from this massive holding plummeted from about $119.6 million to over $54 million. Despite such losses, the whale did not choose to cut losses; its estimated liquidation price is around $2,082, leaving a relatively wide safety margin.

Is this a sign of deep confidence or stubbornness amid losses? Market observers are divided.

Personal Tragedy: The Desperate Cycle of Chain Liquidations

A more tragic story unfolds with traders holding higher leverage. On-chain tracking shows that a trader holding 25x long SETH contracts has recently been liquidated again—this is the tenth liquidation in recent weeks.

Since the major market correction at the end of October, this account has experienced over 200 liquidation events, with total losses surpassing $22.9 million. Today, the account’s available balance hovers around $53,000, nearly at the brink of collapse.

Technical Outlook: Oversold Area Intensifies Downward Expectations

From a technical perspective, Ethereum is in an extremely oversold state. The Stochastic RSI has plunged to around 17, indicating an extremely oversold zone and reflecting very weak short-term market momentum.

Additionally, the Parabolic SAR has shown support near $2,700. If liquidation-driven selling continues to deepen, Ethereum could retest that level.

Conversely, any meaningful rebound requires bulls to regain the psychological threshold of $3,000. Under this condition, upward space is clearly limited, with recent resistance concentrated around $3,436.

The market is still digesting the domino effect caused by leverage, and pressure from the ultra-liquid derivatives market remains heavy.