Ethereum’s $4,000 Ambition: Short Squeeze Looms as Institutional Rails Are Laid
Ethereum (ETH) is currently trading above $3,400. It has gone up more than 3.7% in the last 24 hours after falling sharply to $3,055 on Tue
Quick overview
- Ethereum is currently trading above $3,400 after a 3.7% increase in the last 24 hours, following a sharp drop to $3,055.
- The recent price drop caused over $1.3 billion in long liquidations, significantly altering the derivatives market structure.
- Technical analysis suggests Ethereum may be forming a bottom, with potential support levels between $3,000 and $2,800.
- Long-term projections indicate a possible 'super-cycle' for Ethereum in 2026, contingent on breaking resistance above $4,100.
Ethereum ETH/USD is currently trading above $3,400. It has gone up more than 3.7% in the last 24 hours after falling sharply to $3,055 on Tuesday. The rapid drop, which pushed ETH’s weekly losses over 13%, has made an unusual market scenario that could lead to a huge short squeeze worth more than $7 billion.
Ethereum Flash Crash Wipes Out $1.3 Billion in Leveraged Positions
The sharp decrease in price cleared out liquidity from equal lows around $3,400, a level that had drawn a lot of leveraged positions. The drop caused more than $1.3 billion in long liquidations across all cryptocurrency exchanges. Binance alone saw over $39 million in liquidated long positions, making it the biggest liquidation event since October 10.
This huge deleveraging has completely changed the derivatives market, making it very unbalanced between long and short holdings. The liquidation cascade got rid of overleveraged bulls who had built up positions because they thought the market would keep going up. This changed the structure of the market from what it was before the crash.
ETH/USD Technical Analysis Points to Potential Bottom Formation
Even though the price has dropped sharply, technical signs imply that Ethereum may be making a bottom around its present levels. There is a hidden positive divergence between market movement and the Relative Strength Index (RSI) on the daily chart. ETH has made lower lows, but the RSI has stayed at the same lows. This is a pattern that often means a trend is about to change.
Ethereum has gone through all four conventional market stages in 2025 on the weekly timeframe: decrease, accumulation, markup, and distribution. At the moment, ETH is testing long-term Anchored Volume-Weighted Average Price (AVWAP) support levels, which could mean that the downturn is almost over. The next big area of liquidity is between $3,000 and $2,800, which have historically been levels of structural support.
$7 Billion Short Squeeze Setup Takes Shape
The existing market structure has made it possible for a short squeeze to happen since there is more than $7 billion in short position liquidity around the $4,000 level. If the price trend changes at the $3,000 support zone, even a small recovery might cause a lot of over-leveraged short positions to be liquidated, which could speed up a rise above $4,000.
But not many traders are sure that a breakout would happen right away. Daan Trades, a crypto trader, said, “ETH has fully rejected from that previous cycle high and is now back in that $2.8K–$4.1K range.” There’s a good probability this will move around before the next big change.
Institutional Adoption Strengthens Long-Term Fundamentals
Ethereum’s fundamental outlook keeps getting stronger as more institutions adopt it, in addition to technical aspects. Recently, the Swiss banking behemoth UBS used Chainlink’s Digital Transfer Agent to redeem the tokenized UBS USD Money Market Investment Fund Token (uMINT) for the first time on the Ethereum network. This historic deal shows that blockchain can make the $100 trillion fund business more transparent and get rid of settlement friction.
Mike Dargan, the Chief Operating Officer and Technology Officer at UBS, said that this milestone shows how smart contract-based solutions may improve the way funds work and the experience of investors.
Ethereum Price Prediction: Super-Cycle Brewing for 2026
Long-term technical research shows that Ethereum may be entering a “super-cycle” phase. An analysis of an 8-year historical chart shows that ETH’s five-year upswing has been slowing down and is probably coming to a stop. Analysts, on the other hand, say that this breakout won’t happen until beyond 2025.
Also, macroeconomic variables could help things along. The Federal Reserve just did an overnight repo operation that added $29.4 billion to the banking system. This was the biggest amount since 2020. In 2019, similar liquidity injections came before $255 billion in emergency funding and finally $6 trillion in quantitative easing, which has historically helped risk assets like cryptocurrencies.
- Short-term price target: If the short squeeze happens, ETH could quickly test resistance at $4,000 to $4,100.
- Medium-term outlook: It looks that prices will stay between $2,800 and $4,100 until the end of the year.
- Long-term projection: If the price breaks beyond $4,100 in 2026, it could start a super-cycle rally, and investors who are patient will benefit as Wall Street adoption picks up speed.
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