Ethereum has extended its sharp rally, climbing roughly 25% since Wednesday, as a historic wave of short liquidations, renewed institutional interest, and whale accumulation combined to push prices higher. The second-largest cryptocurrency by market capitalization has now reclaimed several key technical levels, with traders eyeing the $2,431 resistance zone.
The surge comes amid a broader crypto market upswing, with Bitcoin adding 21% in recent days to reach the $75,000 psychological level. However, elevated funding rates and profit-taking signals suggest the rally may face volatility as investors weigh the potential for a pullback.
Record $3 billion short squeeze fuels Ethereum's advance
The cryptocurrency market witnessed its largest short liquidation event on record Wednesday, with approximately $3 billion in forced position closures. Ethereum accounted for roughly 40% of that total, representing about $1.2 billion in short positions that were liquidated as prices surged.
This squeeze accelerated ETH's upward momentum, forcing bearish traders to cover their positions. Open interest has since climbed 5% to $31.67 billion, indicating that traders are returning to the market. Ethereum's funding rates have also risen to 0.081%, the highest level since late May, according to CoinGlass.
Positive funding rates typically signal that long traders are paying shorts, reflecting stronger demand for bullish exposure. While this suggests market participants are positioning for further gains, it also indicates that bullish trades may be becoming crowded, raising the risk of a sharp reversal if prices turn.
Institutional demand via ETFs
Institutional investors have also played a key role in Ethereum's rally, with US spot Ethereum ETFs recording $219.5 million in net inflows on Thursday, according to CoinGlass. This marked the largest single-day inflow since October, signaling that institutional buyers are participating in the recovery.
Continued ETF inflows could bolster the case for further upside, particularly if derivatives activity remains constructive and exchange withdrawals persist. The recent surge in spot demand for Bitcoin has also contributed to the overall market sentiment.
Technical outlook: resistance at $2,431
From a technical perspective, Ethereum's outlook remains bullish after the token moved above its major exponential moving averages (EMAs). The 200-day EMA sits at $2,177, while the 50-day, 100-day, and 20-day EMAs are at $1,961, $1,932, and $1,902, respectively. Holding above these levels indicates that ETH has reclaimed important trend indicators.
The next major resistance level is near $2,431. A sustained breakout above that barrier could open the door to additional gains. However, momentum indicators suggest that Ethereum may be approaching overheated conditions. The 14-day relative strength index (RSI) has climbed to 85, while the stochastic oscillator stands near 92, both signaling overbought conditions.
If ETH retreats, initial support lies near the 200-day EMA at $2,177 and the nearby horizontal level at $2,172. Additional support is found around $1,961, followed by the 100-day EMA at $1,932 and the 20-day EMA at $1,902. More substantial downside levels are located at $1,809, $1,701, and $1,507.
As the market digests these rapid moves, traders will be watching whether Ethereum can sustain its momentum or if a consolidation phase is imminent. The recent crypto surge has been notable, but the risk of a short-term correction remains elevated given the overbought signals.
This article is for informational purposes only and does not constitute financial advice.
