Ethereum's drop to $4,520 after reaching a record above $4,900 has revealed risks of liquidations, particularly for leveraged traders.
Liquidations and Their Impact on the Market
Analysis from XWIN Research Japan shows Mondays consistently record the highest liquidation volumes for Ethereum. Liquidation increases are noted not only on Monday but also on Sunday and Friday, while Saturdays see reduced activity.
> This 'Monday Trap' phenomenon particularly affects traders holding long positions over the weekend.
In April and June 2025, Ethereum experienced liquidation spikes exceeding 300,000 ETH in single days, creating additional price pressure from automatic position closures.
Key Support Levels for Ethereum
Market analyst Crypto Patel provided insights on Ethereum's technical situation following its drop from $4,957 to around $4,400. He identified the support range of $3,900-$4,000 as critical for the cryptocurrency's next major move.
If this support level holds, Ethereum may target price ranges between $6,000 and $8,000. Conversely, a breakdown below $3,900 could lead to further declines towards $3,500 or even $3,200.
Cryptocurrency Market Mechanics
Liquidations occur when leveraged positions fail to meet margin requirements during adverse price movements. Ethereum's high liquidity makes it particularly susceptible to large liquidation events, affecting overall market sentiment.
Exchange netflows indicate Ethereum is moving toward outflows, suggesting accumulation rather than preparation for selling. Institutional demand continues to support Ethereum's long-term outlook despite short-term volatility.
Ethereum's recent correction from record highs has uncovered systematic risks in leveraged trading patterns, especially the recurring Monday liquidity phenomenon. Key support levels between $3,900 and $4,000 may determine near-term price direction.
