Ethereum News Today: Ethereum's Short Squeeze Brews as Whales Buy Dips and On-Chain Metrics Shift

Ethereum (ETH) has avoided a breakdown below $3,000 amid a confluence of on-chain, technical, and market dynamics that signal a potential stabilization phase. Despite a 30% decline from its August peak of $4,955, the cryptocurrency has found support at critical levels, buoyed by weakening bearish momentum and early signs of accumulation. Analysts and on-chain data point to four key factors that have prevented a further slide and could reinforce Ethereum's resilience in the near term.

The Spent Output Profit Ratio (SOPR), a critical on-chain metric, has fallen below 1.00 to 0.97, indicating that investors are selling at a loss. This level historically signals weak-hand exhaustion, creating a favorable environment for buyers to step in, according to an FXStreet analysis. Concurrently, Ethereum's supply in profit has contracted by 32% to 53 million ETH since early October, reducing potential selling pressure and setting the stage for a short-to-medium-term rebound. Such dynamics suggest a shift from panic-driven liquidations to a more calculated accumulation phase.

Ethereum's Relative Strength Index (RSI) has climbed to 32, moving out of oversold territory and signaling waning bearish momentum, as noted by FXStreet. A bullish divergence—where RSI forms higher lows despite lower price lows—has emerged, a classic precursor to trend reversals, according to a Yahoo Finance analysis. Meanwhile, the Moving Average Convergence Divergence (MACD) remains bearish, but traders are closely watching $3,053, a support level that has held since mid-November. A sustained break above $3,338 could validate a rebound, targeting $3,799 and beyond.

Large Ethereum holders, or whales, have quietly accumulated over 394,682 ETH ($1.37 billion) during the recent selloff, signaling long-term conviction, according to a BeInCrypto report. This follows a broader trend of exchange reserves hitting 2016 lows, indicating investors are moving ETH to cold storage rather than trading it. Additionally, the Net Unrealized Profit/Loss (NUPL) ratio has plummeted to 0.27, its lowest since July, suggesting most weak hands have exited, leaving behind determined holders.

Derivatives data reveals a $1.2 billion short-position imbalance between $3,320 and $3,740, nearly 3.5 times the long positions. This creates a high-risk environment for short sellers, as any upward move could trigger a self-reinforcing short squeeze. Recent spot outflows—such as a $359 million withdrawal on November 3—also indicate investors are buying the dip, a pattern historically followed by 7%–13% rebounds, according to a Yahoo article.

While risks remain, including potential dips below $3,053, the interplay of these factors suggests Ethereum's worst may be behind it. With institutional infrastructure advancing and stablecoin innovation expanding, the ecosystem appears poised for a recovery, albeit with caution warranted in the face of macroeconomic uncertainties.