Ethereum Surges 10% After $500 Million Short Squeeze

Ethereum (ETH) experienced a significant short squeeze on June 16, 2025, with $500 million in short positions liquidated. This event occurred despite volatile macroeconomic conditions and geopolitical tensions, particularly the Israel-Iran conflict. Ethereum managed to trade resiliently above the $2,400 mark, sparking renewed bullish hopes among investors.

The liquidation of leveraged short positions triggered a meaningful reset in the Ethereum futures market. The estimated leverage ratio, a metric used to gauge overleveraged positions, declined sharply post-liquidation. This decline suggests that ETH might now be primed for a healthier rally. Traders initially prepared for downside volatility, as indicated by ETH inflows to derivatives exchanges. However, with the market absorbing the shock and ETH maintaining crucial price support, the tone appears to be shifting towards a more bullish outlook.

A critical technical resistance lies at the 50-week Moving Average, as noted by CryptoQuant Insights contributor İbrahim Cosar. Historically, Ethereum’s strongest rallies in October 2023 and November 2024 came after breaching this level. Currently, ETH remains coiled just below this resistance. A weekly candle close above the 50-week MA could confirm a bullish breakout and set the stage for another sustained uptrend.

One promising sign is the drop in Ethereum’s Seller Exhaustion Constant, which now mirrors the lows of January 2024. This indicator combines the percentage of supply in profit with 30-day price volatility. A low score implies that many investors are sitting on unrealized losses while volatility is muted—a classic environment for bottom formation and potential accumulation.

However, not all signals are bullish. The ETH/BTC Spent Output Profit Ratio (SOPR) remains below 1, suggesting that ETH holders are realizing fewer profits (or more losses) compared to BTC investors. This ongoing underperformance relative to Bitcoin hints at continued skepticism in ETH’s price leadership. The ETH/BTC pair saw a brief uptick in April, but since then, its profitability has lagged. For Ethereum to regain investor favor, a reversal in SOPR would likely need to accompany a breakout in ETH/USD price action.

Despite the bullish signals, Ethereum's price movements remain a critical factor for the broader crypto market. As one of the largest cryptocurrencies by market capitalization, Ethereum's price movements can have a significant impact on the overall market. The potential for a breakout in Ethereum could signal a broader market recovery, as other cryptocurrencies may follow suit. However, the event also serves as a reminder of the risks involved in trading cryptocurrencies, and investors are advised to exercise caution and conduct thorough research before making any investment decisions.