Ethereum Under Pressure: A Drop Below $4,200 Could Trigger a Cascade of Liquidations

Ethereum (ETH) is once again entering a danger zone, and crypto traders are on high alert. If the price falls below $4,200, it could trigger massive liquidations of long positions and sharply increase volatility. 🔹 According to data from Hyperdash, more than 56,638 ETH in long positions – worth over $236 million – are currently at risk of liquidation on the decentralized exchange Hyperliquid if the price drops to $4,170. Additional critical liquidation levels are set at $3,940 and in the $2,150–2,160 range. 🔹 At the time of writing, ETH is trading around $4,260, marking nearly a 5% daily decline. Andrew Kang, founder of Mechanism Capital, warned that cascading liquidations could push ETH down to $3,600, and in an extreme scenario even as low as $3,200. He estimates that liquidations could reach $5 billion across exchanges.

👉 Why is this so dangerous?

Liquidation means the forced closure of leveraged trades. This occurs when the market moves against a trader’s position and their account equity falls below the required maintenance margin. The exchange then automatically closes the position to prevent further losses and secure borrowed funds. When primarily long positions are liquidated, it creates sudden selling pressure, driving prices even lower and triggering a cascade effect – more liquidations, deeper declines, and extreme volatility. Ethereum is now at a critical threshold that could determine its short-term trajectory. The market is watching closely to see whether ETH can hold above the psychological $4,200 level or whether a liquidation avalanche will drag it much lower.

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