Ethereum Price Plummets! Are Bulls About to Face a $1 Billion Liquidation Nightmare?

Ethereum's price has recently been trading below significant moving averages, raising concerns about potential liquidation risks and increased volatility in the market. As of the latest reports, Ethereum is up approximately 1-1.5% over the past 24 hours, equating to a gain of around $40-$45 per token. The cryptocurrency's price fluctuated within a range of roughly $3,160 to $3,260 during this period, indicating active but somewhat contained trading.

Despite a brief breakout above a descending trendline, Ethereum has faced rejection and remains capped under its 100-day and 200-day moving averages. This technical barrier has hindered any significant price advancements, echoing similar limitations seen in early November. Analysts are currently monitoring key technical indicators such as the Relative Strength Index (RSI), which has cooled off from overbought levels. This suggests a weakening momentum, with a crucial area now defined by a nearby bullish order block. This zone may serve as either a rebound point for Ethereum or a trigger for further breakdowns.

Market data reveals that futures open interest in Ethereum contracts has risen steadily, even as the price shows only a modest recovery. Historically, such patterns—where open interest climbs without a corresponding price increase—have preceded sharp liquidations as speculative positions unwind. This creates a heightened risk environment, particularly given the current flat price action coupled with elevated open interest.

Tom Lee, Chairman of Bitmine, recently remarked during the Binance Blockchain Week on December 4, 2025, that Ethereum priced at $3,000 is "grossly undervalued." He attributed the ongoing decline in the crypto market primarily to deleveraging rather than any fundamental weaknesses in the assets themselves. Lee's comments highlight an ongoing debate about the true value of cryptocurrencies in the current climate.

As Ethereum remains below crucial moving averages, technical analysts are closely watching whether the cryptocurrency can sustain its support levels or if it will succumb to further downward pressure. The recently broken trendline now serves as a focal point, with previous resistance levels converting into minor support zones. The price action has shown limited follow-through, indicating that while there are glimmers of hope, significant hurdles remain.

In summary, Ethereum's current positioning raises questions about its ability to recover and sustain upward momentum. With both the price and futures open interest indicating potential volatility, investors should remain vigilant. The unfolding situation could lead to sharp movements in either direction, making it essential for market participants to monitor the developments closely.