ETH Deleveraging Wave: 320,000 ETH Potential Selling Pressure, Is the Market Approaching a Liquidation Danger Zone?

Ethereum experienced a sharp decline on February 5, 2026, with the price opening at $2,143.62 and dropping to a low of $1,818.66, a single-day decrease of 15.02%. The market fear and greed index has fallen to 14, indicating an “extreme fear” state.

According to blockchain data, if multiple high-leverage positions associated with well-known institutions are all forcibly liquidated, the market may need to absorb selling pressure of up to 320,000 ETH.

Market Storm: ETH Breaks Key Psychological Level, Staking Confidence and Deleveraging Pressure Intertwined

The Ethereum market is at a complex and tense crossroads. According to real-time data from Gate, as of February 6, 2026, ETH price hovers around $1,939.60, down 6.9% in the past 24 hours.

Market panic is evident, with the fear and greed index dropping to 14, indicating an “extreme fear” state. This sentiment stems from Ethereum’s recent sustained decline — down 21.99% over the past 30 days and a more severe 36.10% over the past three months.

Contrasting the price decline is a subtle positive signal in Ethereum’s on-chain fundamentals. Latest on-chain data shows that the “entry queue” for staking ETH to become validators has reversed and surpassed the “exit queue” for unstaking.

Currently, about 739,824 ETH are queued to enter the staking network, while only 349,867 ETH are in the exit queue. This change suggests that the months-long net outflow of staked ETH may be reversing.

Liquidation Danger Zone: Critical Leverage Positions Under Threat, Damocles’ Sword of 320,000 ETH

Market tension is concentrated around several key liquidation price ranges. According to blockchain analyst @ai_9684xtpa, six high-leverage addresses associated with well-known institution Trend Research face imminent liquidation risk.

These addresses’ liquidation zones are concentrated within a narrow price band of $1,574.23 to $1,681.20. This means that if Ethereum’s price falls further by 13% to 18%, these positions could be forcibly liquidated.

Analysts estimate that if all these leveraged positions are liquidated, the market may need to absorb selling pressure of up to 320,000 ETH.

Key information on potential liquidation positions:

Market is closely watching these critical price levels. Once ETH approaches these “danger zones,” it could trigger a chain reaction of liquidations, leading to more forced closures of leveraged positions, creating a “price decline - forced liquidation - further decline” vicious cycle.

Impact Analysis: Domino Effect and Market Structural Fragility

The potential selling pressure of 320,000 ETH could impact market structure through several channels. Such concentrated selling first tests the depth of exchange order books.

Even on highly liquid trading platforms like Gate, large sell orders can cause slippage to widen, resulting in actual transaction prices significantly below expectations.

The domino effect of chain liquidations is the scenario most feared by the market. Forced liquidation of high-leverage positions itself generates large sell orders, and if these push prices further down, it could trigger more liquidations.

Historical data shows that such events often lead to sharp increases in market volatility, with ETH trading volume surging. This self-reinforcing downward cycle is not uncommon in crypto markets, but its scale and impact depend on overall market liquidity.

Broader market sentiment will also be tested. Investor confidence is already fragile, with the fear and greed index at 14, indicating “extreme fear.” Large-scale liquidation events could further weaken market confidence, leading to broader risk-averse behavior.

Strategic Response: How to Position and Manage Risks in Volatile Markets

In the face of potential market shocks, investors need to adjust strategies to manage risks. Identifying and avoiding key liquidation price zones is a top priority in the short term.

Pay close attention to price movements near the $1,574 to $1,681 range. Technical analysis shows that $1,885.89 and $2,103.85 are recent critical support levels.

For leveraged traders, reducing leverage is a wise choice. On mainstream trading platforms like Gate, setting reasonable stop-loss orders can help limit potential losses. Consider building positions in stages near key support levels rather than all at once to better manage risk.

Market volatility also presents trading opportunities. Technical indicators show that ETH’s 14-day Relative Strength Index (RSI) is at 26.15, entering oversold territory. Historical experience suggests that extreme oversold conditions often precede technical rebounds.

Long-term Perspective: Fundamental Accumulation and Short-term Divergence

It is worth noting that Ethereum’s long-term fundamentals have not completely deteriorated due to short-term price pressures. Despite the market’s deleveraging pressure, staking activity on the Ethereum network is quietly showing positive signs.

Since the end of 2025, the “entry queue” for validators has surpassed the “exit queue.” This shift in staking pattern indicates that, despite weak spot market prices, a considerable amount of long-term capital remains optimistic about Ethereum’s prospects.

The Pectra upgrade implemented in May 2025 increased the maximum effective balance per validator from 32 ETH to 2,048 ETH, significantly reducing staking management costs for large institutions.

Institutional behavior is also diverging. While some leveraged positions are under pressure, entities like BitMine have staked a total of 342,560 ETH (roughly $1 billion) by the end of December 2025, directly contributing to the reversal of the staking queue.

As DeFi platforms like Aave gradually unwind the stETH leverage cycles, systemic selling pressure triggered by DeFi deleveraging is nearing its end. After this short-term pressure eases, the market may focus more on Ethereum’s long-term value proposition.

Summary

As of February 6, Ethereum trades around $1,939.60, with a 24-hour trading volume soaring to $70.94 billion, indicating increasing market divergence.

Panic-driven traders are watching the $1,574 to $1,681 liquidation danger zone, while steadfast long-term investors note that the validator entry queue has overtaken the exit queue by 390,000 ETH — a net staking inflow signal first seen since late 2025.

Market tension is clearly visible on order books of exchanges like Gate, with widening bid-ask spreads and frequent depth tests. Once the deleveraging storm subsides, Ethereum’s ultimate trajectory will still depend on its core value as a global decentralized computing network and its expanding ecosystem moat.