Ethereum (ETH) experienced a sudden price drop to around $3,050, catching many traders off guard and leading to over $1.3 billion in long liquidations. The sharp correction triggered a massive flush-out of overleveraged long positions across multiple trading platforms.
This unexpected dip appears to be part of broader market volatility, with Bitcoin and other major altcoins also seeing sharp intraday swings. But while the correction was painful for bulls, it has set up a potentially explosive setup on the other side of the trade.
A $7 Billion Short Liquidity Wall at $4,000
As Ethereum attempts to recover, all eyes are now on a significant short liquidity cluster building up around the $4,000 level. According to on-chain data and liquidity maps, nearly $7 billion in short positions are stacked just under this key resistance level.
If ETH continues to push upward, it could trigger a cascade of short liquidations — commonly known as a short squeeze — which may rapidly propel prices even higher. This kind of liquidity trap has become increasingly common in the crypto markets, especially during times of high volatility and leverage.
UPDATE: After a flash drop to $3,050 and $1.3B in long wipes, $ETH faces a wall of $7B short liquidity near $4K. pic.twitter.com/S8tsEP9OIR
— Cointelegraph (@Cointelegraph) November 5, 2025
What’s Next for ETH Price Action?
With such a large volume of shorts sitting at $4K, Ethereum’s path forward could be dramatic. If the asset can breach this resistance zone, the liquidation of those short positions could create rapid upward momentum. On the other hand, failure to break through might result in further consolidation or even another downside move.
Traders are watching closely as the battle between bulls and bears intensifies. Whether Ethereum breaks higher or faces rejection, the outcome will likely shape the short-term market direction.