On August 9, the cryptocurrency market welcomed a significant rally, with Ethereum (ETH) price successfully breaking through the $4200 round number, reaching a new 45-month high since November 2021, with a single-day increase of over 8%, and the total market capitalization breaking through the $500 billion mark. This strong rise triggered a collective 'disaster' for shorts in the cryptocurrency market, with nearly $400 million liquidated within 24 hours, among which the largest single liquidation order for Ethereum was valued at $10.6284 million. This sharp rise in Ethereum's price was not coincidental, but rather the result of multiple market factors acting together.



1. Policy benefits and institutional capital form a synergy

1. Policy relaxation opens up long-term capital entry

On August 8, U.S. President Trump signed an executive order, explicitly allowing 401(k) retirement plans to include cryptocurrencies in their investment scope. This policy relaxation is expected to introduce potential long-term capital into the cryptocurrency market, amounting to up to $9 trillion, injecting strong momentum into the market. Among various cryptocurrencies, Ethereum, with its comprehensive smart contract ecosystem and growth potential in the Layer 2 scaling area, has become a key target for institutional capital allocation.

2. Institutional continuous accumulation drives market warming

Global asset management giant BlackRock made a significant purchase of Ethereum in the fourth week of July, investing over $1.2 billion. The Ethereum ETF (ETHA) it launched saw its scale jump from $5 billion to $10 billion in just 10 days, showing rapid growth momentum. Meanwhile, Nasdaq-listed SharpLink Gaming has also been continuously increasing its Ethereum holdings, which have now reached 533,000, with a market value exceeding $2 billion based on current prices. Notably, the spot Ethereum ETF has achieved net inflows for 13 consecutive days, with BlackRock's BUIDL fund allocating 95% of its capital to Ethereum ecosystem-related assets.

2. Short sellers in the derivatives market face pressure, triggering chain reactions

1. Price breakthrough triggers large-scale short liquidation

As the price of Ethereum broke through a key resistance level, market shorts were forced to close their positions, triggering a series of chain reactions. On August 8, there were $1.69 billion worth of Ethereum short positions facing liquidation pressure at the $4100 price level; on August 9, the price further rose to $4200, leading to more short positions being forcibly closed. For example, a trader reduced their short position of Ethereum with 25x leverage, confirming a loss of $15.81 million, with $3.3 million still in floating losses; an investor known as the 'whale with a 75% win rate in four battles' had their 10,080 Ethereum short positions forcibly closed, valued at approximately $40.76 million.

2. Derivatives market activity significantly increases

The derivatives market and spot market are warming up together, with Ethereum's total contract open interest significantly increasing to $51.3 billion, a 10% increase from the previous day. The open interest in Ethereum contracts on mainstream exchanges such as Binance and Bybit has also seen significant increases, reflecting the market's consistently bullish sentiment towards Ethereum. After the price broke through key points, shorts continued to add positions, while bulls actively positioned themselves, leading to an increasingly intense market tug-of-war.

3. Technological upgrades and on-chain data provide solid support

1. Network upgrades strengthen deflationary attributes

In the Pectra upgrade completed in May 2025, Ethereum introduced account abstraction functionality (based on EIP-7702 standards) and increased the staking cap, effectively enhancing the network's usability and security. Coupled with the 80% transaction fee burning mechanism implemented after the prior EIP-1559 upgrade, Ethereum's annualized burning rate reached 1.2%-2.4%, with the growth rate of circulation dropping below 0.5%, successfully constructing a deflationary narrative of 'digital oil'. On-chain data shows that whale addresses holding more than 10,000 Ethereum have continuously increased their holdings since late April, with their total supply reaching a high of 40.75 million.

2. Technical indicators show a strong upward trend

From a technical analysis perspective, after Ethereum's price broke through $3700, it formed an 'ascending triangle' technical pattern, and after stabilizing at this price level, the next target is directly aimed at $4100 (Fibonacci 1.0 position). Although the RSI indicator has risen above 80, indicating signs of market overbought conditions, this overbought state may persist in a strong upward trend; at the same time, in the MACD indicator, the MACD line is significantly above the signal line, indicating a sufficient capacity for the continuation of the uptrend.

4. Market sentiment improves and long-term expectations are optimistic

1. Ethereum shows strong performance relative to Bitcoin

The Ethereum to Bitcoin exchange rate (ETH/BTC) broke through 0.033, reaching a new high since February 2025. Analysts predict this rate may further rise to 0.045 or even higher levels. Placeholder partner Chris Burniske stated that in 2025, Ethereum's 'smart contract platform' narrative dominates the market, especially in the context of a surge in decentralized finance (DeFi), non-fungible tokens (NFTs), and tokenized asset applications, further highlighting Ethereum's ecological advantages.

2. Price prediction and risk warnings coexist

Standard Chartered previously predicted that Ethereum's price would break through $4000, and as of August 8, that price had reached $3900, nearing the predicted target. If companies like Huajian Medical further expand their Ethereum reserves, the value of their holdings may exceed $4 billion. More aggressive market views suggest that Ethereum's price may hit the target price of $16,000, returning to the exchange rate levels seen during the 2021 bull market. However, the market also needs to be wary of the risk of a pullback after being overbought, especially if the $3600 support level is breached, which could lead to more contract liquidations.


This breakthrough in Ethereum's price is not only an important milestone in price levels but also signifies the resonance of institutional capital, technological upgrades, and market sentiment. With the subsequent Dencun upgrade (which will reduce Layer-2 transaction fees) and the release of more policy dividends, Ethereum's 'digital oil' narrative is expected to continue to dominate market trends.#ETH突破4000 #特朗普加密新政 $ETH

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