Ethereum's $4,000 Stand: $1.7B Liquidations Threaten Critical Support

Ethereum (ETH) has experienced a sharp decline, trading near $4,185 as of September 22, 2025, a drop of 3.9–4.2% over the past 24 hours. The price collapse has triggered over $1.7 billion in liquidations across the altcoin sector, according to Coinglass data, as broader market selloffs intensified selling pressure. The critical $4,000 support level has become a focal point for traders, with analysts warning that a breakdown could trigger further corrections.

On-chain data reveals mixed signals, with more than 420,000 ETH withdrawing from exchanges this week, indicating long-term holder accumulation. Glassnode reports that these outflows suggest a tightening of supply, yet immediate sentiment remains cautious. Short-term traders are wary of further price declines, while long-term holders continue to accumulate during the downturn. The divergence between exchange outflows and the current price action highlights the market’s uncertainty.

Technical analysis underscores the precarious position of Ethereum. The price is trading just below the 20-day EMA but remains above the 200-day EMA, creating a conflicting signal. Key resistance is now at $4,800, while the $4,000–$4,200 range represents critical support. The RSI has dipped to 41, signaling bearish momentum, and analysts caution that a retest of the $3,700–$3,800 range could occur if the $4,000 level fails. Donald Dean, an economist, notes that Ethereum is retesting a high-volume trading zone near $4,200, where buyers could step in to initiate a recovery.

The Ethereum Foundation has contributed to short-term sell pressure, having sold over $31.5 million worth of ETH through multiple transactions. Additionally, more than 3.2 billion dollars’ worth of ETH is queued to exit staking, adding to near-term volatility. Whale activity has also intensified, with a recent $26 million ETH dump and rising exchange inflows signaling caution. These factors, combined with macroeconomic headwinds such as delayed U.S. interest rate cuts and elevated producer inflation (PPI), have dampened buyer enthusiasm.

Derivatives data highlights aggressive shorting, with open interest on Binance dropping 15% since mid-September and negative funding rates across major exchanges. CryptoQuant notes that the current conditions align with historical capitulation phases, where sharp price declines often precede rebounds. However, the risk of cascading liquidations looms large. If Ethereum falls below $4,000, estimates suggest up to $1.19 billion in liquidations could accelerate the sell-off, potentially pushing the price toward $3,200–$3,600.

Analysts remain divided on the near-term outlook. While some view the current dip as a buying opportunity, others emphasize the need for caution. Michael van de Poppe, a market analyst, argues that the $4,000–$4,100 range could attract accumulation, setting the stage for a recovery. Conversely, Andrew Kang of Mechanism Capital warns that prolonged weakness could erode institutional confidence, exacerbating the sell-off. The next 48 hours will be critical in determining whether Ethereum stabilizes or enters a deeper correction.

The broader crypto market mirrors Ethereum’s struggles, with Bitcoin also underperforming. As the second-largest cryptocurrency, Ethereum’s movements often influence altcoins and DeFi tokens. A sustained breakdown below $4,000 could trigger a wider selloff, testing the resilience of the $3,600 support level. For now, the market is bracing for volatility, with both bulls and bears closely monitoring the $4,000 threshold.

[1] Ethereum (ETH) Price: Holds $4,000 Support as $1.7B Liquidations Sweep Market (https://coincentral.com/ethereum-eth-price-holds-4000-support-as-1-7b-liquidations-sweep-market/)

[2] Ethereum News Today: Ethereum Plunges 6.4% to $4,173 as $452M Liquidations Test $4,000 Support (https://www.analyticsinsight.net/news/ethereum-news-today-ethereum-plunges-64-to-4173-as-452m-liquidations-test-4000-support)

[3] ETH Falls Below $4.2K, Traders Eye $4,000 Buy Zone (https://coinedition.com/ethereum-price-drops-4000-support-level-buy-zone/)

[4] Ethereum Price Crash: Drop Below $4,000 Could Trigger $1 Billion in Liquidations (https://coinpedia.org/news/eth-price-crash-drop-below-4000-could-trigger-1-billion-in-liquidations/)

[5] Will Ethereum Price Drop to $4,000 As the Foundation Offloads $30M in ETH? (https://www.thecoinrepublic.com/2025/08/15/will-ethereum-price-drop-to-4000-as-the-foundation-offloads-30m-in-eth/)