"Worst Since 2021": Ethereum Triggers Mass Panic Among Retail Investors Amid Bloody Liquidations

▲ Ethereum (ETH)

Ethereum (ETH) is experiencing its longest and most severe liquidation crisis since 2021, battling to defend key price support levels.

According to crypto media outlet NewsBTC on February 12 (local time), Ethereum has unleashed a record level of forced liquidations over the past week, exerting broad downward pressure on the market. Notably, this liquidation event is not a one-time crash but the longest sustained liquidation phase since mid-2021, intensifying market fear. A report by on-chain data analytics firm CryptoQuant showed that as of February 6, the seven-day simple moving average of Ethereum long liquidations on Binance surged to approximately 9,000 ETH.

This phenomenon is interpreted not merely as price volatility but as a gradual unwinding of excessive leverage in the derivatives market. As Ethereum’s price retreated from around $3,000 to the $2,000 range, accumulated long positions were liquidated in stages, contributing to a structural cleanup of the market. Experts suggest that continued liquidations could remove speculative froth and restore market health, while closely watching whether the psychological support level of $2,000 will hold.

Currently, Ethereum is trading below the critical psychological threshold of $2,000 as it searches for direction. The Relative Strength Index (RSI), a key technical indicator, is approaching oversold territory, while open interest has dropped sharply due to large-scale liquidations, reflecting a cautious stance among market participants. The Market Value to Realized Value (MVRV) ratio also indicates declining investor profitability, signaling an environment where additional selling pressure may emerge.

Market analysts are closely monitoring whether this historic week of liquidations will mark a short-term bottom for Ethereum or the beginning of a further downturn. Some argue that once the deleveraging process nears completion, a strong rebound could follow alongside renewed liquidity inflows. However, amid macroeconomic uncertainty and unstable movements in Bitcoin (BTC), a defensive posture and continued base-building are likely to persist in the near term.

Within the Ethereum ecosystem, rising staking volumes and expectations for network upgrades remain intact, leading some to view the current liquidation event as a potential accumulation opportunity for long-term holders. However, if the $2,000 level is not decisively reclaimed, additional panic selling could occur, making it essential to closely monitor exchange inflows.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses resulting from its use. The content should be interpreted solely for informational purposes.*