ETH faces a critical test: $1.32 billion in short positions by whales could trigger a chain reaction

The current ETH market is at a delicate juncture. According to the latest data, Ethereum’s price is fluctuating around $2.96K, while on-chain signals reveal noteworthy abnormal movements.

On-Chain Trends Reveal Deep-Seated Risks

According to information disclosed by BlockBeats, a highly watched whale wallet has once again initiated a large-scale shorting strategy. This institutional-level player has just borrowed 80 million USDC and withdrawn over 30,000 ETH, bringing its total short position to 385,000 ETH, with an open exposure valued at $1.32 billion.

Such a scale of shorting activity cannot be ignored. When a single participant controls such a large debt position, the market often enters a self-reinforcing downward cycle. Other institutional investors and large holders are likely to perceive this signal and follow suit with similar operations, ultimately leading to a collective deterioration of market sentiment.

Technical Indicators Show Clear Warning Signs

From an hourly chart perspective, Ethereum is facing multiple technical pressures:

Resistance Levels: The key support/resistance level at 3500 has evolved into the strongest resistance zone. Even if ETH occasionally touches this level, it often quickly retreats and struggles to close above it. The more distant level at 3588 is a height that is difficult to reach in the short term.

Weak Support: The support line at 3400 is currently barely holding, but its defensive strength is gradually weakening. Once this level is effectively broken, the next downside target points to the secondary support zone at 3360.

Negative Indicator Features: The MACD indicator continues to operate below the zero line, and volume data shows active downward momentum. The current market rebound is more of a technical correction rather than a sign of trend bottoming.

Recent Trend Analysis

Based on the combined on-chain and technical factors:

In the short term, if ETH can increase volume and break above 3500 successfully, it could test the 3588 resistance. However, under the shadow of such a large whale shorting pressure, the probability of this scenario occurring is relatively low.

A more realistic development path is: the rebound energy at around 3500 exhausts itself, followed by another decline. Once the 3400 support is broken, the market will target the 3360 zone. The ongoing shorting operations by whales are likely to accelerate this negative process.

Risk Management Recommendations

For current holders: Any technical rebound approaching 3500 should be viewed as an opportunity to reduce positions. Protecting principal always takes precedence over chasing gains in the current market environment.

For those not yet entered: It is advisable to stay on the sidelines and wait for signs of stabilization around 3360 before considering light long positions. Gradual position building and strict risk control remain fundamental principles.

Regardless of the operational strategy, setting stop-loss orders is essential. In the context of increased market volatility, stop-loss orders are investors’ last line of defense.