Dramatic Loss for ETH Shorts: Over Half a Billion in Value Erased Last Week
In a remarkable turn of events, the cumulative Assets Under Management (AUM) of Ethereum spot ETFs has more than doubled in just one month, reaching an impressive $23.3 billion. This surge comes as Ethereum (ETH) attempts to break the $4,200 mark.
The past week has been particularly eventful for Ethereum, with bears losing almost $500 million due to short liquidations. This significant loss is primarily attributed to a combination of factors, including a strong short squeeze driven by overbought technical conditions, institutional buying, and shifts in market sentiment fueled by macroeconomic and geopolitical optimism.
A massive short squeeze and overbought technical indicators played a significant role in the recent price surge. Ethereum's Relative Strength Index (RSI) reached an overbought level of about 70.57, signaling strong bullish momentum that undermined bearish short positions.
Large institutional buys, such as Harvard’s $116.6 million IBIT ETF investment and MicroStrategy’s Bitcoin purchases, bolstered confidence in the crypto markets, adding bullish pressure that contributed to forcing shorts out of positions.
Improved U.S.-Russia diplomatic talks, hopes for a Ukraine ceasefire, and expectations around the upcoming 2025 Bitcoin halving also contributed to positive market sentiment, further squeezing shorts.
Large-scale ETH sell-offs amid volatility also played a role in the liquidations. The Ethereum Foundation, whales, and hackers transferred and sold over $500 million worth of ETH recently, with whale wallets alone offloading about $242 million to exchanges. This selling amid heightened volatility and sharp negative net taker volume put downward pressure, accelerating liquidations of short positions during price swings.
On-chain data showed episodes of mixed Ethereum ETF flows and a decline in aggressive taker buying/selling volume, which reflected repositioning by large holders and increased volatility that triggered liquidations.
The Ethereum spot ETFs in the U.S. registered a significant inflow of value, with $462 million injected in one day. Fidelity's FETH and BlackRock's ETHA funds are responsible for 82.6% of this massive inflow.
Meanwhile, Bitcoin (BTC) bears only lost $112 million during the same period, due to the price of Bitcoin being relatively stable.
Ethereum (ETH) ecosystem veteran Brantly Millegan has observed that ETH/BTC is surging on seven out of eight TradingView time periods. Ethereum has seen a 50% price increase over the past 30 days.
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- The surge in Ethereum's price, as it attempts to break the $4,200 mark, can be attributed to factors such as a massive short squeeze, overbought technical indicators, institutional buying, and improved market sentiment due to macroeconomic and geopolitical optimism, as well as the influx of value into Ethereum spot ETFs.
- institutional investors like Harvard and MicroStrategy have bolstered confidence in the crypto markets with their significant purchases of Ethereum and Bitcoin, adding bullish pressure that led to the liquidation of short positions.
- While Bitcoin bears only lost $112 million during the same period due to its relatively stable price, Ethereum bears lost almost $500 million due to large-scale sell-offs and heightened volatility, which accelerated liquidations of short positions during price swings.
