Crypto traders should remain vigilant for an ether (ETH) price drop below $4,200, which could trigger millions in long liquidations and increase market volatility.

As of writing, over 56,638 ETH in bullish long positions – valued at $236 million – faced liquidation risk on the decentralized perpetual exchange Hyperliquid in case of an ether price drop to $4,170, according to data from Hyperdash.

The data also showed a risk of sizable liquidations at $2,150-$2,160 and $3,940. At press time, ether changed hands at $4,260, down nearly 5% on the day, according to CoinDesk data.

Andrew Kang, founder of the crypto venture capital firm Mechanism Capital, stated on X that large long liquidations could potentially drive ether prices down to $3,600.

"[I] would estimate we're about to hit $5b in ETH liquidations across exchanges, taking us down to $3.2k - $3.6k," Kang said.

Liquidations, or the forced closure of leveraged bets, happen when a trader's position falls short of the margin requirements set by the exchange.

The margin shortage typically occurs when the market moves against the trader's position, causing their account equity to fall below the minimum maintenance margin. This prompts the exchange to automatically close the position to prevent further losses and ensure borrowed funds are recovered.

Largely long liquidations cause a sudden surge in selling pressure, which pushes prices even lower, creating a cascading effect that can trigger additional liquidations. This negative feedback loop tends to amplify market volatility.

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