Ethereum Faces Biggest Bloodbath Since 2021

9/23/2025
3min read
Denislav Manolov's Image
by Denislav Manolov
Crypto Expert at Airdrops.com
9/23/2025
3min read
Denislav Manolov's Image
by Denislav Manolov
Crypto Expert

A $1.53 Billion Market Shock Hits ETH

Ethereum (ETH) endured its largest liquidation cascade since May 2021, wiping out nearly $900 million in leveraged positions on Monday. The broader market saw $1.53 billion liquidated within hours, hitting 404,386 traders and slamming the altcoin sector just as DeFi and lending markets were showing recovery signs.

ETH fell below $4,200, retaining a market dominance of 12.8%. While the event marked the largest nominal liquidation value in four years, it wasn’t as devastating in price terms as 2021, when ETH crashed by 45% during a similar liquidation wave. This time, prices proved more resilient, with losses contained and signs of stabilization already appearing.

Binance Liquidations Drive the Crash

The biggest trigger came from liquidations on Binance, where whales dumped ETH and set off a cascading effect on leveraged longs. According to on-chain data, one whale moved over $72 million worth of ETH to Binance just before the sell-off, converting AETHWETH from Aave into liquid ETH to sell more easily.

Another large holder dumped 1,000 ETH as losses accelerated, intensifying the panic. Analysts suggested even Binance’s own wallets may have played a role in pushing the market down, further attacking over-leveraged traders.

ETH open interest still sits above $27 billion, meaning that the market remains vulnerable to another flush if prices slide further. Based on liquidation data, ETH could test the $4,100 level if pressure continues, while recovery targets sit around $4,400, where short liquidity is building.

DeFi Liquidations Add Fuel to the Fire

Alongside exchange-driven losses, DeFi liquidations also spiked, though on a smaller scale. Nearly $22 million in loans were liquidated in just 24 hours, mostly tied to ETH and wrapped ETH (WETH) collateral.

This underscored the fragility of the DeFi lending market, where sudden price shocks can quickly cascade through automated liquidation systems. Still, compared to the centralized exchange impact, DeFi’s footprint in this crash was relatively limited.

Whale Behavior Signals Panic and Strategy

While much of the selling looked like panic-driven liquidation, some whales acted strategically. The timing of large ETH transfers to Binance raised questions over whether big players deliberately triggered liquidations to profit from short positions.

“The biggest factor behind ETH’s drop was cascading liquidations on Binance, compounded by whale selling from multiple wallets,” one analyst observed.

Such coordinated activity has historically amplified volatility in ETH markets, making it harder for retail traders to hold their positions.

Can ETH Recover Above $5,000?

Despite the chaos, ETH bounced back above $4,200 within hours of the crash. Historically, Ethereum has shown strong recovery momentum following liquidation cascades, quickly regaining its broader uptrend. 

Market sentiment, however, remains cautious. Analysts describe the outlook as neutral with a slightly bearish tilt, though some traders still predict ETH could attempt to break a new all-time high above $5,000 if recovery momentum builds.

As one veteran trader put it: “Watching ETH right now feels like a knife-edge — it could sink to $4,100 or surge toward $5,000 depending on the next wave of liquidations.”
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