Ethereum Price Soars as Short Squeeze Looms and Capital Rotates from Bitcoin

Ethereum (ETH) is seeing a sharp summer rally, rising to $3,755—up 5.7% in the past 24 hours and over 25% in a week—fueling speculation of a potential short squeeze. According to CoinDesk data, this surge has made ETH one of the best-performing major assets in the crypto market.

Market analysts point to a combination of aggressive short positioning and capital rotation from Bitcoin as key drivers. Crypto Banter noted on X that “$ETH is the most hated rally right now,” with around $331 million in short positions at risk of liquidation if ETH reaches the critical $4,000 mark, per CoinGlass data. A break above this level could trigger a cascading liquidation, accelerating bullish momentum.

Renowned trader Pentoshi highlighted that Bitcoin dominance has seen its steepest weekly decline in four years, signaling a shift toward Ethereum. He described the ETH rally as a “melt up,” suggesting prices are being driven more by FOMO than by fundamentals.

Fueling this shift is a new structural trend: ETH treasury accumulation. Public firms like Bitmine Immersion Technologies and SharpLink Gaming are reportedly accumulating large ETH holdings, potentially vying for up to 1% of total supply, according to Pentoshi.

Meanwhile, analyst Benjamin Cowen emphasized Ethereum’s relative strength, noting that ETH/BTC is outperforming other alt/BTC pairs. He suggested ETH is becoming a lower-risk play among altcoins, mirroring Bitcoin's behavior during previous cycles.

With capital flowing into ETH, short positions piling up, and institutional demand growing, Ethereum's current trajectory may be far from over. Investors are now watching closely to see whether a break above $4,000 ignites a full-blown squeeze.