Ethereum Breaks $3100 Threshold, Triggering $629 Million Short Liquidation Pressure on CEXs

Ethereum (ETH) is approaching a pivotal price level of $3,100, where the potential for significant short liquidation pressure exists. As of January 2, Coinglass data indicates that if Ethereum rises above $3,100, mainstream centralized exchanges could see $629 million in cumulative short liquidations. This figure underscores the intensity of short positions concentrated in that price range.

Conversely, if Ethereum drops below $2,900, the market could face $972 million in long liquidations according to data. These liquidation clusters reflect the fragile balance between bullish and bearish positions, with traders bracing for a potential shift in momentum.

The market's focus on these key levels is amplified by recent developments in Ethereum's price behavior. Over the past week, Ethereum has remained above the $2,900 level despite increased selling pressure. The Exchange Netflow metric, which tracks the difference between deposits and withdrawals on exchanges, shows that approximately 400K ETH was deposited last week, indicating a rise in short-term selling activity. Retail investors, particularly those holding 100-1K ETH and 1K-10K ETH, were the primary sources of selling activity, distributing a combined 370K ETH in the past week according to data.

Why Did This Happen?

The pressure on Ethereum is also being fueled by institutional activity. A whale known as 1011short deposited 112,894 ETH, worth roughly $332 million, into Binance, the largest crypto exchange by trading volume. This move typically signals impending selling pressure, especially on exchanges with high liquidity, as large selloffs require significant order books to execute without causing severe price slippage. The whale has active short positions in Ethereum and other major cryptocurrencies and is currently facing unrealized losses.

Meanwhile, investment firm Trend Research has been accumulating Ethereum over the past month, recently borrowing an additional $1 billion in stablecoins from Aave to support further purchases. Trend Research now holds 601,074 ETH, worth $1.8 billion. This accumulation suggests a bullish outlook despite the broader market's downward trend.

Ethereum's performance in the fourth quarter has been its weakest in six years, with outflows from U.S.-based crypto ETFs contributing to the bearish trend. Last week, spot Ethereum ETFs recorded a net outflow of $102.3 million, with only one positive day since December 11. In contrast, the Ethereum-based Layer 2 decentralized exchange Lighter's LIT token is generating significant buzz, with its premarket valuation reaching over $3 billion according to reports. While the LIT token has not yet begun open trading, its valuation highlights the speculative nature of the current market environment.

How Did Markets Respond?

The broader market is also watching for a breakout in Ethereum. If ETH breaks above $3,100, it may trigger a cascade of short liquidations that could create a self-fulfilling upward trend. Conversely, a drop below $2,900 could lead to a wave of long liquidations that further depress the price. These liquidation events are not exact in terms of notional values but represent relative importance, with taller liquidation bars indicating more intense price reactions once breached.

Ethereum's price is also being influenced by macroeconomic factors. The upcoming release of the Federal Reserve's minutes could trigger short-term volatility. Analysts, including Ted Pillows, are watching closely to see if Ethereum can reclaim and hold above the $3,000 level. A sustained move above that level would signal renewed bullish momentum and potentially align with broader market expectations.

What Are Analysts Watching Next?

Market participants are also tracking the staking activity of Bitmine, the Ethereum treasury controlled by Tom Lee. Bitmine's aggressive staking of over $1.2 billion in ETH introduces a bullish narrative. If sustained, this activity could help ETH reclaim $3,000 and potentially reach $3,131 by early January 2026. A confirmed breakout above that level would be a major psychological and technical victory for Ethereum.

On the bearish side, failure to align with Bitmine's bullish outlook may trigger a correction. A drop below $2,902 would invalidate the current pattern and expose Ethereum to a decline toward $2,796. This scenario would likely undermine recovery expectations and could initiate a short-term downtrend.

The market is also closely watching the behavior of Ethereum ETFs. While some funds like the iShares Ethereum Trust ETF (ETHA) continue to dominate with inflows of $12.6 billion, others like the Fidelity Ethereum Fund (FETH) and the Grayscale Ethereum Mini Trust ETF (ETH) have seen more modest inflows according to data. These flows suggest that while there is still demand for Ethereum through regulated investment vehicles, the pace has slowed.

In the coming weeks, traders and analysts will be closely monitoring both retail and institutional investor activity. The key questions will be whether Ethereum can break out of its current range and whether new institutional inflows can offset the bearish pressure from short-term selling and outflows. With liquidation clusters forming at $2,900 and $3,100, the next few days could be decisive for Ethereum's near-term trajectory.

As the market awaits the outcome of these critical price levels, the liquidation pressure on CEXs serves as a clear signal of the heightened volatility in the crypto space. Investors are advised to exercise caution and to consider position sizing and risk management strategies in light of these developments.

The coming week will likely bring clarity on Ethereum's direction. If the price manages to break above $3,100, the liquidation pressure could create a short-term bullish surge. Alternatively, a breakdown below $2,900 may trigger a deeper correction. The path forward will depend on the balance between these forces and the broader macroeconomic environment, including the release of the FOMC minutes and potential regulatory developments in the crypto space.

In the context of a broader market that continues to show signs of consolidation, Ethereum's performance will serve as a barometer for investor sentiment and market stability in the early part of 2026.