Binance Could Spark a Historic Ethereum Short Squeeze—Here’s the Ticking Time Bomb
Ethereum shorts are sitting on a powder keg—and Binance just lit the fuse.
The exchange's latest move threatens to trigger a cascading liquidation event that could send ETH prices rocketing. Traders betting against the second-largest crypto might soon find themselves in a world of pain.
When the squeeze comes—and it's coming—the rush to cover positions could create the mother of all gamma ramps. Just don't tell the 'smart money' that got caught with their leverage down.
Remember: Wall Street still thinks crypto is a casino. They're not wrong—they're just bad at gambling.
Key Insights:
- Leading cryptocurrency exchange Binance’s Ethereum open interest has climbed to $10 billion.
- Institutional demand surged as BitMine and other major buyers accumulated large ETH holdings.
- High open interest, reduced supply, and strong ETF inflows has created conditions for a potential Ethereum short squeeze.
Binance’s ethereum open interest passed $10 billion in August 2025, with analysts pointing to large institutional buying.
Analysts are convinced that reduced supply and market positioning are possible drivers for a short squeeze.
Amid speculations, ethereum price traded near $4,300, moving closer to its record price from 2021.
Binance Ethereum Open Interest Hits New High
Reports showed that Ethereum’s open interest on Binance climbed to $10 billion, up 46% in 30 days. This was the highest in recent months and came as the price reached about $4,300 in August 2025.
The figure put ETH within reach of its previous all-time high of $4,867.17, set on 10 November 2021.
According to analysts, market-wide short positions have grown 500% since November 2024.
The past week alone saw a 40% increase. If prices keep rising, traders holding short positions could be forced to buy back ETH.
This is known as a short squeeze and can push prices up further in a limited period.
Additionally, the recent price strength followed Ethereum’s Pectra upgrade on 7 May 2025.
The upgrade added EIP-7251, letting validators hold up to 2,048 ETH, and EIP-7702, which changed how accounts work.
This made rewards higher, gave validators more choice, and helped the network run better.
Layer-2 transaction costs dropped by as much as 90% after the earlier Dencun hard fork, all fueling the current ETH adoption trend.
The Tom Lee and BitMine Buying Impact
Beyond upgrades, institutional demand has also played a large role in ETH’s recent performance. Spot Ethereum ETFs, launched in July 2024, have seen steady inflows in recent times.
By July 2025, total trading volumes had gone over $117 billion. In one week alone, these ETFs recorded $2.18 billion in inflows.
One of the most notable buyers has been BitMine Immersion Technologies, connected to market analyst Tom Lee.
The company has bought about 1.2 million ETH. On 12 August 2025, BitMine filed to expand its at-the-market equity program by $20 billion.
This brings total issuance capacity to $24.5 billion. The filing indicated the funds WOULD be used to purchase more Ethereum.
Large purchases like these have reduced the amount of ETH held on exchanges. When available supply falls and demand stays high, it can put upward pressure on prices.
Ethereum Price Levels and Market Outlook
Market analyst EmperorBTC noted that a buy signal was given at $3,500 earlier in August.
Since then, ETH has risen 20% on spot markets. Charts shared by EmperorBTC showed strong demand levels and potential resistance NEAR the all-time high.
The analysis suggested that a break above the current consolidation range could open the way for new highs.
However, a pullback remained possible in the short term. Support for Ethereum price was identified around $4,200, which traders might watch for re-entry points.
Spot market demand has been helped by ETH treasury purchases from companies and record ETF buying.
While some traders have taken profits, others have prepared for possible dips by setting buy orders at lower levels.
Regulation and Broader Conditions
The market environment in 2025 has been shaped by a mix of regulatory and policy changes.
The settlement of the Ripple-SEC case and the WHITE House’s “Crypto Law” have brought more clarity to the industry in the United States.
In addition, President Donald Trump signed an executive order allowing cryptocurrency to be included in 401(k) retirement plans.
In Europe, the MiCA framework has provided rules for licensing and operating crypto services, which have encouraged more institutional involvement.
These factors, combined with high open interest, large institutional buying, and reduced supply, have led analysts to say the setup for Ethereum in the coming weeks is one to watch.
