Ethereum (ETH) Signals Potential Short-Term Bottom Amid Easing Liquidation Pressures

Ethereum (ETH) is showing signs of forming a potential short-term bottom as liquidation pressures subside, with its price hovering around $4,100 on September 29. Technical analysis and market data suggest that a shift in momentum, driven by liquidations and renewed buying activity, may support Ethereum’s recovery in the short term.

Key Liquidation Activity Around $3,900 Spurs Initial Rebound

Data from Coinglass reveals that Ethereum experienced concentrated liquidations in the $3,900–$3,950 price range between the evening of September 28 and the early hours of September 29. A marked increase in forced closures of bearish short positions acted as a catalyst for ETH’s price rebound, pushing it past the psychologically significant $4,000 level.

Coinglass’s heatmap highlights key liquidity zones, with concentrations of liquidations marked in yellow and green. The $3,900 zone showed high leverage unwinding activity, allowing prices to stabilize and rally. Following this, Ethereum briefly climbed near $4,200, demonstrating a strong bullish momentum.

Additionally, the heatmap highlights liquidity accumulation in the $4,000–$4,050 range, which initially acted as a zone of market equilibrium before ETH moved upward. This range seems to have developed into a potential support level as the asset retraces toward $4,100. Whether Ethereum holds this level will likely determine its near-term price trajectory.

Dominance of Short Liquidations Drives Price Momentum

In the past 24 hours, Ethereum’s upside movement has been heavily influenced by liquidations, with $128.18 million in total liquidated positions. Crucially, approximately 91% of this volume, or $117.88 million, came from short positions. This overwhelming dominance of short liquidations has alleviated selling pressure, creating a clearer path for Ethereum’s recovery.

One particularly notable liquidation occurred on the Hyperliquid exchange, where a single transaction in the ETH-USDT trading pair wiped out $26.02 million. Such high-value liquidations demonstrate a significant unwinding of leverage-driven short positions, further fueling Ethereum’s price rally and reducing bearish market sentiment.

Recovery in Open Interest and Trading Volume Bolsters Market Confidence

Post-liquidation, Ethereum’s open interest (OI) metrics align with the broader recovery narrative. Despite recent market weakness, OI levels remained relatively stable through mid-September. With the subsequent rebound, open interest has climbed back to approximately $6 billion, signaling renewed participation from traders opening fresh positions.

This recovery in open interest has been mirrored by rising trading volumes, suggesting that Ethereum’s bounce is supported by demand-driven buying, rather than being solely the result of forced position closures. The combination of increasing spot market activity and sustained OI recovery hints at a more structurally sound basis for Ethereum’s upward movement.

Current Market Indicators and Outlook for Ethereum

As of now, Ethereum is trading at $4,104, reflecting a 2.5% gain over the last 24 hours. Market dynamics appear to have transitioned into an upward trend supported by short squeezes and a reduction in selling pressure. These factors collectively point to the potential formation of a short-term bottom at current price levels.

However, challenges lie ahead. Coinglass heatmaps show gaps in liquidity above the $4,200 level, suggesting that resistance zones are less well-defined in this range. Whether Ethereum’s rally continues will likely depend on key factors such as sustained trading volumes and spot market buying interest.

Investors and traders should remain attentive to Ethereum’s liquidity patterns and volume trends. These metrics will play a pivotal role in determining whether ETH can overcome emerging resistance and establish a more robust recovery. Ultimately, Ethereum's ability to sustain its upward trajectory may hinge on strong market participation and continued demand from buyers.