ETHUSD Ethereum Liquidation Cascade: Why -13.08% Decline Triggered $1.15B Wipeout

Ethereum USD (ETHUSD) experienced a sharp decline of -13.08% on February 1, 2026, as massive liquidations swept through crypto derivatives markets. A single trader lost $220 million on Hyperliquid when an ETH-USD position worth $222.65 million was forcibly closed. This event triggered a broader market cascade, with total crypto liquidations exceeding $2.5 billion in 24 hours. The ETHUSD price fell from $2,817.79 to $2,449.36, marking one of the most severe single-day declines in recent months. Understanding what drove this liquidation event and where ETHUSD technical levels stand is critical for traders monitoring this volatile market.

What Triggered the ETHUSD Liquidation Event

The ETHUSD liquidation cascade began when overleveraged positions on decentralized derivatives exchange Hyperliquid faced forced closures due to rapid price movement. A single ETH-USD position worth $222.65 million was wiped out, representing the largest individual liquidation across all crypto exchanges on February 1. This event occurred during a period of thin liquidity, where relatively small price declines can trigger cascading margin calls across multiple exchanges.

In total, 434,945 traders were liquidated across all platforms in the 24-hour period. Long positions accounted for $2.42 billion of the $2.58 billion total losses, while short positions represented only $163 million. Hyperliquid bore the heaviest damage with $1.09 billion in liquidations—over 40% of total losses—followed by Bybit with $574.8 million and Binance with $258 million. ETH positions specifically saw $1.15 billion liquidated, making Ethereum the hardest-hit asset after Bitcoin’s $788 million in losses.

Market Sentiment: Trading Activity and Liquidation Pressure

Market sentiment shifted sharply bearish as liquidation data revealed extreme positioning in long positions. The concentration of losses in bullish bets signals that traders had accumulated significant leveraged exposure ahead of the decline. Hyperliquid’s dominance in total liquidations indicates that decentralized derivatives platforms attracted the most aggressive leverage, creating vulnerability to sudden price moves.

Trading volume surged to 578.1 million on February 1, representing 1.70x the 30-day average volume of 312.8 million. This elevated volume reflects panic selling and forced liquidations rather than organic buying interest. The relative volume spike confirms that the decline was driven by margin calls and position unwinding rather than fundamental selling pressure. Market data shows that large liquidations often precede temporary bottoms, though additional downside remains possible if support levels break.

ETHUSD Technical Analysis

The RSI at 49.07 sits in neutral territory, indicating neither overbought nor oversold conditions. This suggests selling pressure has eased from extreme levels, though momentum remains weak. The MACD histogram at 29.38 shows positive divergence with the signal line at -26.88, suggesting early signs of bullish momentum building beneath the surface.

The ADX at 24.43 indicates a weakening trend, just below the 25 threshold that signals strong directional movement. Bollinger Bands show ETHUSD trading near the lower band at $2,771.08, with the middle band at $3,008.50 and upper band at $3,245.91. Price positioning near the lower band historically attracts mean-reversion buying. Support levels at $2,771 (Bollinger lower band) and $2,238.74 (day low) represent critical technical floors. Resistance emerges at $2,710.09 (day high) and $3,008.50 (Bollinger middle band).

ETHUSD Price Forecast

Monthly Forecast: ETHUSD targets $2,536.09 by end of February, representing a +3.55% move from current levels. This modest recovery reflects stabilization after the liquidation event and potential support-level holding.

Quarterly Forecast: By end of Q1 2026, ETHUSD is projected to reach $2,787.04, a +13.78% increase. This forecast assumes the liquidation cascade clears overleveraged positions and allows for gradual recovery as market structure improves.

Yearly Forecast: ETHUSD targets $3,636.09 by February 2027, representing a +48.48% annual gain. This projection reflects recovery toward the 50-day moving average at $3,050.78 and eventual movement toward the 200-day average at $3,671.04.

Forecasts may change due to market conditions, regulations, or unexpected events. These price targets are based on historical patterns and technical levels, not investment recommendations.

Why ETHUSD Dropped 13.08% in a Single Day

The -13.08% single-day decline resulted from a perfect storm of overleveraged positioning, thin liquidity, and forced liquidations. When the first major position was closed on Hyperliquid, it created immediate selling pressure that cascaded through other exchanges. Traders holding leveraged long positions faced margin calls as collateral values declined, forcing automatic position closures at market prices.

This liquidation-driven move is characteristic of crypto derivatives markets during low-liquidity periods. The 50-day moving average at $3,050.78 sits 24.5% above current price, indicating significant distance from key technical support. Year-to-date performance shows ETHUSD down -10.38%, reflecting broader market weakness beyond just the February 1 event. The combination of leverage unwinding and reduced market depth created conditions where small price moves triggered exponential losses.

Recovery Outlook and Key Support Levels

ETHUSD recovery depends on whether support levels hold and liquidation pressure subsides. The $2,771.08 Bollinger lower band represents the first critical support, with the $2,238.74 day low providing a secondary floor. If these levels break, ETHUSD could test the $1,383.26 year low, though such a move would require additional negative catalysts.

Positive factors include the RSI at neutral levels, suggesting oversold conditions have cleared, and the MACD histogram showing early bullish divergence. The 50-day moving average at $3,050.78 remains a key resistance target for recovery trades. Market data from CoinGlass indicates that large liquidations often mark temporary bottoms, though confirmation requires price stabilization above $2,500 and volume normalization below the current 1.70x relative volume spike.

Final Thoughts

ETHUSD experienced a severe -13.08% decline on February 1, 2026, driven by a $220 million single liquidation on Hyperliquid that triggered a broader $2.5 billion crypto market wipeout. The liquidation cascade revealed extreme overleveraged positioning in long positions, with 434,945 traders liquidated across all exchanges. Technical analysis shows ETHUSD trading near Bollinger lower band support at $2,771.08, with RSI at neutral 49.07 and MACD showing early bullish divergence. Price forecasts suggest monthly recovery toward $2,536.09 and quarterly movement to $2,787.04, with yearly targets at $3,636.09 assuming liquidation pressure clears. The key takeaway is that while the February 1 decline was severe, it likely cleared overleveraged positioning and created conditions for potential stabilization. Traders should monitor support levels at $2,771 and $2,238.74 for confirmation of a bottom. The elevated trading volume at 1.70x average reflects forced liquidations rather than organic selling, suggesting the worst of the cascade may have passed. Recovery will depend on whether ETHUSD can stabilize above $2,500 and attract fresh buying interest as margin calls subside.

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Disclaimer:

Cryptocurrency markets are highly volatile. This content is for informational purposes only. The Forecast Prediction Model is provided for informational purposes only and should not be considered financial advice. Meyka AI PTY LTD provides market data and sentiment analysis, not financial advice. Always do your own research and consider consulting a licensed financial advisor before making investment decisions.