Ethereum (ETH), the second largest cryptocurrency, is once again at the center of market speculation following the sudden leap of leveraged short positions, which brought the potential for a short squeeze to a critical threshold. Analysts say record shorts combined with fresh inflows could make Ethereum highly volatile.
In recent weeks, Ethereum has witnessed strong volatility. Having dropped as low as $2,100 in June amid a worldwide market sell-off, ETH mounted a swift recovery driven by institutional inflows and whale accumulation. Through mid-August, the price had risen above $4,300, with the recovery momentum looking impressive.
Since January, the ETH market has been hit by record hedge shorts in an effort to cap Ethereum’s growth. Despite this, steady demand and strong whale accumulation have kept ETH resilient. Meanwhile, almost $378 million in stablecoins have been put on the Ethereum network in the last 24 hours.
Short Squeeze Inevitable?
The analyst argued that a product purchased in massive volumes cannot simply collapse, calling these shorts the main reason ETH remains under pressure.
At the time of writing, ETH was trading around $4,300, far above the summer lows of $2,100 and roughly 20% higher than a month ago. With whales continuing to accumulate and shorts piling up, market observers are preparing for what may be Ethereum’s next big breakout.
A similar pattern could now play out, with short sellers forced to cover their positions, creating upward pressure.
Also Read: Ethereum Faces Sell Pressure from Foundation, Yet Bulls Persist
