Ethereum’s Potential Short Squeeze

Ethereum, the second-largest cryptocurrency by market capitalization, is on the verge of a potential short squeeze that could propel its price past $4,500. According to AMBCrypto, a $10 billion short squeeze could be the catalyst for this significant price increase.

Drivers Behind the Short Squeeze

The stablecoin market is expected to grow to $3.7 trillion by 2030, according to US Treasury estimates. This growth could lead to more on-chain activity, resulting in higher fees, more burn, and increased demand for Ethereum. As The Daily Dollar notes, this fundamental catalyst has real teeth.

Technical Analysis

A short squeeze occurs when a heavily shorted asset experiences a rapid price increase, forcing short sellers to cover their positions. This can create a feedback loop of panic buying, driving the price even higher. According to Coinglass’s Liquidation Map, a sustained break above $4,200 could target $2.04 billion in short liquidations, representing a significant potential pool of liquidity.

Market Outlook

If Ethereum manages to close daily candles above $3,500, a retest of the $3,800 resistance zone becomes likely. However, a rejection at $3,500 could push ETH back to retest $3,200, with a worst-case scenario around $3,000. As Bitget notes, the RSI currently sits around 41, recovering from oversold territory, indicating weakening bearish momentum.

Expert Insights

Experts believe that Ethereum’s potential short squeeze could be the catalyst for a significant price increase. With the stablecoin market expected to grow exponentially, Ethereum is well-positioned to benefit from this growth. As AMBCrypto notes, a short squeeze could force those betting against ETH to buy it back quickly, sending the price even higher.