Ethereum Short Squeeze
Ethereum Surges Past $2,600 Following Major Short Position Liquidations
Anonymous
Key Points
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Ethereum’s rebound came after a steep longer-term decline: ETH was still about 46% below its January high near $4,720, despite gaining roughly 34% over the preceding two months and breaking above $2,000 in late August.
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The broader liquidation event reached approximately $758 million across crypto positions in 24 hours, with Ethereum accounting for roughly 40% of the total. On Bitstamp alone, ETH short liquidations were estimated at $215 million, compared with about $91 million in liquidated longs.
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The on-chain evidence included specific but opposing whale movements: one tracked wallet transferred about 167,855 ETH, worth roughly $408 million, to major exchanges, while another withdrew approximately $238 million in ETH from Binance to self-custody.
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The inflation report included a 0.4% month-over-month rise in headline CPI, a 0.3% increase in core CPI, a 3.9% jump in gasoline prices and renewed shelter pressure; CME FedWatch subsequently placed the odds of a quarter-point rate hike at nearly 90%.
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ETH’s short squeeze was especially concentrated: roughly $255 million in ETH short positions were liquidated during the day, including about $188 million in a single hour, compared with approximately $172 million in Bitcoin short liquidations.
Ethereum surged above $2,600 on Friday after the U.S. inflation report, briefly climbing to roughly $2,660 before pulling back toward $2,530. KuCoin reported that the move triggered nearly $250 million in liquidated ETH short positions, with much of the gain appearing driven by forced buying rather than fresh investor demand.
The broader crypto market saw $758 million in total position liquidations across 24 hours, with Ethereum accounting for about 40% of that total. CoinRank noted that Ethereum ETFs added $216 million in inflows, marking the fourth consecutive week of gains for the sector.
Weak Inflation Data Unleashes Short Squeeze
The inflation report showed a 0.4% month-over-month rise in headline CPI and 0.3% increase in core CPI. Pluang reported Bitcoin briefly fell to $76,050 after the release before recovering above $77,000. The data raised recession concerns and sent traders scrambling to close leveraged short bets.
On Bitstamp alone, $215 million in ETH short positions were liquidated, compared with just $91 million in liquidated longs. KuCoin tracked $188 million in liquidations occurring within a single hour, making this one of the most concentrated short squeezes in recent weeks.
Ethereum Still Down 46% From January Peak
Despite Friday's rally, Ethereum remains significantly below its January high near $4,720. The token has gained roughly 34% over the preceding two months and broke above $2,000 in late August, but the current price reflects persistent weakness from earlier in the year.
Traders are now watching whether ETH can hold support near $2,500 and challenge the $2,700–$2,800 supply zone. A sustained breakout would strengthen the recovery narrative. Fading whale activity or another reversal would suggest the rally was primarily temporary leverage relief.
Mixed On-Chain Signals From Major Wallets
Large whale activity showed opposing moves. KuCoin reported one tracked wallet transferred approximately 167,855 ETH (worth roughly $408 million) to major exchanges, suggesting potential selling pressure ahead. Meanwhile, another whale withdrew about $238 million in ETH from Binance to self-custody.
The mixed signals suggest uncertainty about the strength of this bounce. Exchange deposits typically signal sellers preparing to dump, while self-custody transfers indicate conviction holders moving assets to safety. Traders will need to watch whether inflows persist or reverse in coming days.
Fed Rate Hike Odds Rise as Market Concerns Mount
CME FedWatch data placed odds of a quarter-point rate hike at nearly 90% following the inflation report. Higher rates typically pressure crypto assets, which offer no yield and compete with safer fixed-income alternatives. This macro headwind could limit upside for Ethereum even if short covering continues.
The $758 million in total crypto liquidations across 24 hours shows leverage remains high across the sector. Bitcoin short liquidations reached approximately $172 million, but Ethereum's $255 million dwarfed that figure, highlighting how concentrated the squeeze was in altcoins.
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