Ethereum Clears $3K Liquidity Cluster in Major Shakeout — $4,000 ETH Rally Next?

Ethereum(ETH) rally got a hit on Wednesday after price plunged to $3,055 in a sharp sell-off that cleared a critical liquidity cluster near $3,000 and triggered over $1.3 billion in leveraged liquidations across cryptocurrency exchanges, before stabilizing around $3,400 at press time.

The move marked the largest Ethereum long position wipeout since October, fundamentally reshaping derivatives positioning and setting the stage for potential volatility ahead.

BREAKING:🚨 After a flash drop to $3,050 and $1.3B in long wipes, $Ethereum faces a wall of $7B short liquidity near $4K. pic.twitter.com/4dSlCueuRx

— Micon Crypto (@MconCrypto) November 5, 2025

$1.3 Billion Liquidation Event Resets Market Structure

The Tuesday drawdown eliminated equal-low liquidity concentrated around $3,400, forcing mass liquidations of leveraged long positions. Across the market, Ethereum liquidations have surpassed $121.72 million in the last 24 hours.

Source: Coinglass

Long positions dominated the losses across multiple exchanges. On Binance alone, $35 million in ETH long positions were liquidated.

The forced deleveraging removed immediate selling pressure from leveraged traders. Meanwhile, the sweep below $3,100 turned a previously active support zone into cleared territory, pushing the short-term price structure into bearish territory.

Following the liquidation wick, derivatives markets now show large short-side liquidity stacked around the $4,000 level. This concentration creates conditions where a sharp upward move could trigger rapid short covering.

Immediate support now sits between $3,000 and $2,800, levels that have historically provided structural support for Ethereum. A decisive close below this band would increase downside risk probabilities.

Short Squeeze Setup Emerges Near $4,000 Resistance

Liquidity heat analyses reveal concentrated short positions between $4,000 and $4,300. If Ethereum finds support and buyers initiate a strong bounce, these short positions face potential squeeze mechanics.

The derivatives reset has elevated open interest levels while changing the distribution of liquidation points. Funding dynamics shifted following the wipeout, creating a more volatile environment for repositioning.

Source: CryptoQuant

Short-term momentum indicators moved into oversold ranges during the crash before recovering modestly. The partial rebound aligns with relief bounce characteristics rather than confirmed trend reversal.

Several technical analysts identified a bearish pennant continuation pattern on intraday timeframes. A downside break from this pattern could activate measured targets near $2,380.

Conversely, a daily close above $3,400 would invalidate the immediate bearish continuation thesis. Such a move would likely improve short-squeeze probabilities and open paths toward ETH rally towards $3,700–$4,000.

CyclesWithBach, a Crypto analyst and macroeconomic observer, also added that the current ETH setup is still one of the cleanest multi-year pattern out there.

According to him, this is not the time to be bearish as Ethereum targets breakout above $4,000

“Crypto sentiment completely washed out and in Extreme Fear. That’s usually when you want to pay attention”, he added.

Technical Analysis: Chart Shows $4,000 ETH Rally Next

The break below $3,400 equal-lows represents the primary technical event, transforming previously active liquidity into swept territory and shifting short-term structure bearish.

Relative Strength Index readings entered oversold territory during the decline before rebounding modestly. This behavior suggests short-term relief rather than established bullish momentum.

Key resistance now sits at $3,400, with the 50-day simple moving average and prior resistance clustering between $3,700 and $4,000. Support levels concentrate between $3,000 and $2,800.

The bearish pennant pattern remains active on intraday charts. A confirmed breakdown would activate measured downside targets in the low $2,000s, while upside breaks would negate continuation scenarios.

A bullish scenario requires Ethereum to hold $3,000–$2,800 support and post a clean daily close above $3,400. This would likely trigger short covering toward $4,000.

A bearish scenario activates on weekly closes below $2,800–$3,000 with sustained selling pressure. This would validate pennant continuation and open measured targets toward lower levels.

Short-term price trajectory remains neutral to bearish pending resolution of the $3,000–$3,400 range, with elevated volatility expected as derivatives markets reposition.