Ethereum Endures Historic Liquidation Week: Largest Sustained Liquidation Phase Since 2021

Overview

Ethereum is currently trading below the critical $2,000 level, reflecting ongoing market pressure as traders look for a clearer directional catalyst. The sustained inability to reclaim this psychological threshold has resulted in cautious sentiment, elevated volatility, and uncertain liquidity conditions.

Recent Market Developments

According to a recent report from CryptoQuant, the Ethereum market is experiencing one of its most prolonged periods of stress since mid-2021. On February 6, 2026, the 7-day simple moving average of long liquidations on Binance reached approximately 9,000 ETH. This figure indicates a sustained liquidation phase rather than a sudden spike, signaling that leveraged long positions have been gradually unwound over several days.

This ongoing deleveraging process suggests that the market is under persistent pressure, and the lack of significant capitulation events during Ethereum’s decline from the $3,000 region to the $2,000 range highlights this trend. Instead of a brief liquidation cascade, the market has faced a prolonged sequence of margin calls, indicating that traders are experiencing sustained stress as prices trend lower.

Historically, extended liquidation phases can help reset market leverage and reduce speculative excess. However, they often coincide with fragile sentiment, leading to questions about whether the current process will stabilize Ethereum or result in further downside. The report suggests that Ethereum may have undergone a significant leverage reset, potentially leading to seller exhaustion as weaker market participants exit their positions.

Market Structure and Price Dynamics

The weekly chart for Ethereum indicates increasing structural pressure following the loss of the $2,000 level, which previously served as both psychological support and a key technical pivot. This breakdown has placed Ethereum below major trend-defining moving averages, suggesting a weakening bullish momentum and a shift towards a more defensive market environment.

The price action reflects a clear rejection from the $3,000 region earlier in the cycle, followed by a series of lower highs, which typically characterize transitional or corrective phases. The latest decline has also coincided with rising trading volume, indicating that the current dynamics are more associated with distribution or the unwinding of leveraged positions rather than organic accumulation.

The next significant support area for Ethereum appears to be in the mid-$1,500 to $1,700 range, where previous consolidation and demand have emerged. Maintaining above this range would be crucial for preserving a long-term bullish framework, even amid current market weaknesses. Conversely, a sustained break below it could shift sentiment toward a deeper corrective cycle.

From Author

The current state of Ethereum illustrates the complexities of market dynamics in the face of prolonged stress. The gradual unwinding of leveraged positions highlights the challenges traders are facing, while the market’s inability to reclaim critical price levels raises questions about future momentum. As participants navigate these conditions, the interplay between liquidity, sentiment, and technical levels will be essential in determining Ethereum’s trajectory.

Impact on the Crypto Market

• Ethereum’s inability to reclaim $2,000 reflects broader market caution, influencing trader sentiment.
• The sustained liquidation phase suggests a reset in the derivatives market, potentially reducing speculative excess.
• The lack of significant capitulation events indicates that market participants are facing ongoing stress rather than a short-lived downturn.
• The rising trading volume during recent declines raises concerns about distribution rather than accumulation, further stressing the market.
• Key support levels around $1,500 to $1,700 will be crucial for determining Ethereum’s long-term bullish framework.
• Overall market recovery is contingent on renewed spot demand and stabilization above critical technical levels.