Ethereum Rally to a New High?-Analysis of ETH Short Squeeze

Is ETH set to retest its ATH?

Key Insights

• Ethereum could rally to a new high as shorts are getting squeezed

• After a prolonged price stagnation, the recent breakout has left bears crashing

  
  

Ethereum (ETH) is showing signs of a powerful rally. On daily charts, Ethereum has surged 10.24% reaching a 5-month high of $3395.

The price rally has captured market attention, with some crediting increased whale and institutional accumulation. However, other analysts such as DarkFost think Short Squeeze is the major cause of the recent upswing.

From Correction to Comeback

In his analysis, Darkfost observed that, since December 2024, ETH entered a long correction phase. This bearish stretch lasted five months, pushing prices lower and triggering long liquidations.

Source: Cryptoquant

Many traders were forced to exit their bullish positions, especially on Binance. That “flush out” phase removed excess leverage and cooled market sentiment. It also created a healthier foundation for a new rally, one that seems to have begun two months ago.

Read Also: Bitcoin hits a new all-time high

Now the Shorts Are Getting Squeezed

The trend has now reversed. According to Cryptoquant's analyst DarkFost, short positions are being liquidated at a fast pace on Binance, showing growing pressure on bearish traders.

Source: Cryptoquant

This shift means more traders were betting against ETH and are now being forced to buy back as prices rise, fueling the rally.

Recent data shows two major short squeezes with liquidation volumes reaching $32 million and $35 million. That kind of volume reflects intense pressure on bears and shows that many were caught off guard by ETH’s strength.

Ethereum Rally to a New High?

Notably, short squeezes don't just trigger rallies; they often sustain them . With forced buyers entering the market, ETH gains more bullish momentum, pushing it higher with each failed short attempt.

Source: Tradingview

If this trend continues, ETH could retest its previous ATH soon. Firstly, Spot ETH ETFs are gaining traction, bringing in new capital. Secondly, institutions and whales are accumulating ETH as a long-term digital asset.

The more traders bet against ETH, the more fuel the uptrend gains from their exits. If liquidations continue to pile up and buying pressure holds, ETH could soon reclaim $4k and eye a new all-time high.