Ethereum’s $331M Short Squeeze Looms as Price Nears Critical Supply Zone
Ethereum bulls are circling—and $331 million in short positions could be their next meal.
The second-largest crypto by market cap is testing a key supply level, threatening to trigger a cascade of liquidations. Traders who bet against ETH now face a brutal reckoning as the asset shows strength.
When shorts get squeezed, the rally gets going. And this one's got Wall Street's 'risk-managed' hedge plays looking downright amateur.
Massive Short Liquidation Looms As Ethereum Targets $4,000
Ethereum’s recent rally has put pressure on short-sellers, and top analyst Ted Pillows has highlighted a critical level that could trigger a major squeeze. According to Pillows, approximately $331,170,000 worth of short positions will be liquidated if ETH reaches the $4,000 mark. This data point reveals a highly asymmetric setup where a single upward push could set off a domino effect of forced buybacks, fueling even more upside.
In crypto markets, when short positions are liquidated, traders are forced to buy back the asset to cover their losses. This automatic buying adds to the existing demand and can rapidly accelerate the price action, leading to what is known as a short squeeze. Given the concentration of shorts at $4,000, a clean break above this level could result in a sudden and aggressive price spike, catching bears off guard and shifting momentum further in favor of the bulls.
Beyond technical triggers, ethereum is also benefiting from improving macro conditions. Legal clarity in the US — through recent legislation like the Clarity and GENIUS Acts — is reducing regulatory uncertainty for projects and investors alike. Combined with increasing ETF inflows and rising on-chain activity, these factors suggest Ethereum could be entering the early stages of a much larger expansion phase. As the $4,000 level approaches, all eyes are now on whether this key threshold will act as a catalyst for Ethereum’s next major leg up.
ETH Eyes Breakout As Momentum Builds
Ethereum (ETH) continues to show impressive strength, currently trading around $3,817.49 after gaining 1.57% on the day. The chart reflects a powerful upward move, with ETH surging past major resistance near $2,850. The recent breakout has been supported by strong volume, confirming bullish conviction as Ethereum rapidly approaches the psychological $4,000 mark.
The 50-day, 100-day, and 200-day moving averages are all trending upward, further validating the current uptrend. ETH is well above all key SMAs—specifically the 200-day SMA at $2,824.88—which now acts as solid macro support. The next test lies just above current levels at the $3,850–$4,000 zone, a historically significant resistance area. A breakout here could spark a larger move, potentially leading to new yearly highs.
However, traders should remain cautious. After a 50%+ rally in just a few days, a period of consolidation or a brief pullback wouldn’t be unusual. If Ethereum fails to break and hold above $4,000, we could see a retest of the $3,742 support.
Featured image from Dall-E, chart from TradingView
