Overview
Ethereum ETH has been experiencing a striking rally, recently breaking above $4,000 for the first time since December 2024 a move that triggered a wave of short liquidations and placed the asset squarely in the sights of traders tracking a potential short squeeze.
Short Liquidations Triggered
Upon breaking past $4,000, Ethereum saw approximately $105 million in short positions liquidated, making up about 53% of all crypto short losses on that day. The price peaked near $4,060 before retracing slightly .
Another source reported even larger figures closer to $119 million in short liquidations, with open interest nearing three year highs .
Key Resistance & Potential Upside
Market watchers, including Ash Crypto, have identified $4,100 as a critical resistance level. A successful move above this could unleash a rapid and strong short squeeze, potentially propelling ETH to $4,400 $4,500 within hours .
Factors Supporting the Rally
1. ETF Inflows & Institutional Demand
Over the past four trading days alone, spot Ethereum ETFs have received about $537 million in inflows, signaling growing institutional interest .
2. Whale Accumulation & Rising On-Chain Activity
Ethereum’s total value locked (TVL) in DeFi protocols and staking has surged, depletion of liquid supply, and accumulation by whales are reinforcing bullish sentiment .
3. Extreme Short Positions in Futures Markets
As of early July, leveraged funds held a disproportionate amount of shorts over 12,574 short contracts versus just 1,275 long contracts (about 51.7% of total open interest) a positioning ripe for a reversal .
Risk & Caution Indicators
Overbought Signals & Elevated Funding Rates
Earlier in July, ETH saw a 70% monthly surge, resulting in a record RSI of 83.6 and funding rates up 248%, warning of overextended conditions and a possible correction .
Seasonal Weakness
Historically, August and September have been weaker months for Ethereum. Analysts urge caution even amid the current bullish momentum .
Conclusion: Bulls vs. Risks
The current setup strongly suggests a short squeeze lurking especially if Ethereum breaks and holds above the $4,100 threshold. Massive short unwinds, ETF inflows, and strong positioning of whales point to a potential explosive upward move.
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