Ethereum Plunges Below Key Support, But Could Flushed Leverage Fuel a Rebound?

The early hours of Friday saw a sharp market-wide sell-off after Israel launched a surprise military strike on Iran, triggering a wave of panic selling and heavy liquidations across major assets—particularly ETH.

Ethereum Flash Crash Triggers Massive Long Liquidations

Ethereum bore the brunt of the initial reaction. On Binance, ETH plunged below the $2,600 support level, setting off a liquidation cascade. According to CryptoQuant’s report, the heaviest losses were concentrated in the $2,650 to $2,430 zone, where many traders had placed leveraged long bets near $2,800 in anticipation of a continued rally.

Instead, the price collapse through key support zones hit a wall of stop-losses and liquidation triggers, leading to a rapid washout of overextended positions. The wipeout wiped clean much of the late leverage that had built up during Ethereum’s recent upside attempt.

Bitcoin Funding Rates Turn Deeply Negative

The fallout quickly spread to Bitcoin, where derivatives markets responded with a surge in short interest. Funding rates on Binance for BTC turned deeply negative, reaching levels not seen since June 8—another moment of capitulation following a swift price correction.

This reflects a significant pivot in trader positioning, as sentiment has flipped to overly bearish amid broader market uncertainty.

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Is a Price Rebound in Sight?

Despite the fear-driven reaction, CryptoQuant suggests the current setup could offer a high-risk, high-reward entry opportunity. Historical data shows that extreme negative funding rates often mark moments of excessive bearishness—sometimes preceding a rebound once panic subsides.

Moreover, the forced liquidation of late ETH buyers may have flushed excess leverage, setting a cleaner base for any potential recovery. With selling pressure potentially exhausted in the short term, both BTC and ETH could see stabilization or even a relief bounce—especially if geopolitical tensions de-escalate.

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