ETH Rally Defies Gravity: Why Unrealized Profits Aren’t Slowing This Bull Run

Ethereum's price surge shows no signs of hitting the brakes—despite what traditional profit-taking logic would suggest. Here's why this rally might have staying power.

The Unshaken ETH Thesis

Most assets tumble when holders cash in profits. Not ETH. The second-largest crypto keeps climbing even as unrealized gains stack up—defying conventional market mechanics.

Liquidity vs. Greed

Unlike meme coins that crumble at the first whiff of profit-taking, Ethereum's deep liquidity pools and institutional backing create a pressure valve. Traders rotate positions without sparking panic sells.

The DeFi Engine

Staking yields and Layer 2 adoption turn paper hands into diamond hands. Why sell when you're earning 5% APY and transaction fees keep plummeting? (Take notes, traditional savings accounts.)

This isn't 2021's reckless bull run—it's a more mature market that finally learned to HODL. Though let's be real: Wall Street will still call it a 'bubble' right up until they finish accumulating their positions.

Spot demand grows for ETH

Demand for ETH increases, based on a drive to use wrapped or staked forms of the token for passive income. The Ethereum unstaking validator queue also saw fewer requests after a recent spike. Buyers are trying to tap multiple sources of ETH, including older staked coins or unwrapped ETH. 

The main driver of spot buying are still ETFs, which continued their aggressive accumulation. Both ETH and BTC are seeing an inflow of whale buyers, as Cryptopolitan reported earlier. 

ETH accelerated its net outflows from exchanges, showing the strengthening demand from individual whales and corporate buyers. Strategic ETH reserves broke above $10B in total, after the latest purchases from BitMine and SharpLink Gaming. In total, buyers take 413K ETH from the market each week, while only around 15K are minted and retained in the supply. 

ETH demand may come from the eventual addition of staking and in-kind settlement for ETFs and other vehicles. The requirement for Ethereum reserves may boost spot demand additionally. Additionally, over 35% of ETH is locked, representing 28.3% of the supply.

ETH awaits short squeeze to $3,900

Another major driver of the ETH rally is the peak open interest and the accumulation of short positions. Currently, liquidity has accumulated around $3,900, suggesting a short squeeze may drive the price of ETH higher. 

In the past 12 hours, ETH saw a shift to short liquidations, attacking $20M up to the $3,800 price range. On a 24-hour basis, ETH saw more than $93M in long liquidations. Currently, ETH may make a MOVE toward $3,600 based on accrued long liquidity.

Ethereum open interest is still above $26B, down from a recent $28B peak. ETH saw significant liquidations, but quickly returned to speculative trading, as the asset awaited a renewed rally.

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