Ethereum's $4,500 Hurdle Could Spark $1.5B Short Squeeze

If Ethereum (ETH) breaks above the $4,500 level, it would trigger a significant amount of short liquidations on major centralized exchanges (CEXs), reaching a cumulative total of $1.485 billion. This data comes from Coinglass, which tracks the positioning of leveraged trades on major platforms. The threshold represents a critical price level for traders with short positions, as any upward movement beyond this level could lead to the forced closure of their bets due to insufficient margin coverage [1].

Conversely, should the price of ETH fall below $4,101, it would trigger the liquidation of long positions totaling $1.649 billion. This data point underscores the current tight balance between bullish and bearish sentiment among traders, as both long and short positions carry substantial exposure [3]. The proximity of ETH’s current price to these key levels highlights the volatility in the market and the risk of large-scale liquidation events, particularly in a leveraged trading environment.

The liquidation data is closely tied to broader market dynamics. For example, recent on-chain data from Coinglass reveals a notable concentration of liquidity around the $4,520 zone. This price level acts as a magnet for price action, as traders anticipate large clusters of leveraged positions being liquidated upon reaching that threshold [7]. In addition, the long/short ratio for ETH, a metric that measures the balance between bullish and bearish futures positions, stands at 1.01, indicating a slight tilt toward bullish sentiment [7]. This slight edge among long-position holders suggests that market participants are cautiously optimistic about ETH’s near-term trajectory.

The significance of these levels is further highlighted by Ethereum’s historical price behavior. For instance, Ethereum recently broke out of a long-term wedge pattern, a technical formation that had constrained price movement since 2021. This breakout has positioned ETH to potentially reach the $7,000 level, a 62% upside from its current price, assuming momentum continues [5]. The wedge breakout provides a structural foundation for bullish expectations, reinforcing the potential for a significant upward move in the coming months.

At the same time, Ethereum’s on-chain fundamentals are undergoing a transformation. While its price has reached record highs, the network’s on-chain revenue has declined by 44% month over month in August, driven by the Dencun upgrade, which reduced transaction costs on Layer-2 solutions but diminished Layer-1 fee income [6]. Despite this, institutional demand for ETH is rising, with U.S. spot ETFs drawing in $13.7 billion in inflows as of the latest data. This growing adoption by institutional investors, along with corporate treasury strategies that involve staking ETH, is helping to justify its elevated price in the eyes of long-term holders.

The combination of strong institutional interest, technical momentum, and leveraged positioning has positioned ETH at a pivotal moment. A breakout above $4,500 would not only trigger a large short liquidation but could also serve as a catalyst for a broader rally toward $5,000 and beyond. However, should the price fail to maintain its current upward trajectory, a drop below $4,250 could lead to renewed bearish pressure and a retest of key support levels. Traders and investors are closely watching these developments, as they represent a potential turning point in Ethereum’s market cycle.

Source: [1] ChainCatcher (https://www.chaincatcher.com/en/article/2204127) [2] Cryptonews (https://cryptonews.net/news/ethereum/31576765/) [3] ChainCatcher (https://www.chaincatcher.com/en/article/2203957) [4] Bitget (https://www.bitget.com/news/detail/12560604954903) [5] Mitrade Insights (https://www.mitrade.com/insights/news/live-news/article-3-1101920-20250907) [6] TradingNews (https://www.tradingnews.com/news/ethereum-price-forecast-eth-usd-steadies-at-4300-usd) [7] Mitrade Insights (https://www.mitrade.com/insights/news/live-news/article-3-1096401-20250904)