Ethereum Surges 19% in Two Weeks Amid Short Squeeze

Ethereum (ETH) has experienced a significant rally over the past two weeks, climbing from $2,111 on June 12 to $2,515 on June 25. This surge has reignited hopes for a sustained bullish trend that could propel the digital asset beyond the critical $3,000 level.

The recent rally in Ethereum has been marked by a notable shift in market dynamics. This includes a transition to positive funding rates, a potential short squeeze, and an increase in ETH inflows to a major crypto exchange. Positive funding rates typically indicate that traders are opening or holding leveraged long positions, reflecting expectations of further price increases. However, rising funding rates also raise the risk of a short-term price pullback if long positions become overextended. Data shows that a significant percentage of liquidations over the past 24 hours were long positions, highlighting this risk.

A short squeeze has played a significant role in Ethereum’s recent price surge and the increase in funding rates. As ETH’s price climbed, it retested the previous short-squeeze zone around $2,500. This dynamic occurs when traders who had bet against ETH (shorts) are forced to close their positions by aggressively buying back the asset to limit losses, triggering a cascading effect known as a short squeeze.

Additionally, ETH inflows to a major crypto exchange have spiked. On-chain exchange data suggests that a large volume of ETH was deposited into the exchange over a three-day period. Such a surge typically signals increased selling pressure or large-scale repositioning by major holders. Large transfers of ETH to exchanges often precede either potential sell-offs or liquidity provisioning.

While a short-term correction may be likely, ETH’s breakout above $2,500 underscores the aggressive speculative activity driving its recent price action. Traders are advised to closely monitor funding rates and exchange flows for signs of an impending retracement.

Recent technical analysis suggests that ETH may be gearing up for a breakout above the $2,800 resistance level. The asset also recently formed a golden cross on the daily chart, fueling speculation that a new all-time high (ATH) could be within reach. However, technical analysts have also predicted that the cryptocurrency may revisit lower levels in the $1,700 to $1,950 range. At the time of reporting, ETH trades at $2,429, down 0.4% over the past 24 hours.