Ethereum’s All-Time High Sparks Short Squeeze Season—What Comes Next?

Ethereum has achieved a new milestone by surpassing its previous all-time high set in 2021, climbing above $4,900 before a slight correction. At the time of writing, ETH trades around $4,655, representing an 8.2% gain over the past week.

This rally comes after three years of consolidation below its former peak, marking a significant moment for the second-largest cryptocurrency by market capitalization. Unsurprisingly, Ethereum’s upward momentum has also shifted market sentiment, placing most ETH holders back in profit.

The latest movement has been tied not only to retail activity but also to growing institutional participation. Analysts argue that this demand could be a major factor supporting Ethereum’s renewed market strength.

Institutional Demand and Market Positioning

One of CryptoQuant’s contributors, known as Oinonen, highlighted how Ethereum is increasingly attracting institutional interest, signaling a change in the broader narrative.

While Bitcoin has historically been viewed as the preferred digital asset for large investors, Ethereum’s use in decentralized finance (DeFi) and the recent inflows into spot ETH exchange-traded funds (ETFs) are shifting perceptions.

“Ethereum is now emerging as a challenger to Bitcoin’s institutional dominance,” Oinonen wrote. As an example, he pointed to Tom Lee’s Bitmine Immersion Technologies, which acquired $6 billion worth of ETH in just two months.

This alone boosted Ethereum’s market capitalization from $300 billion to $557 billion. For context, MicroStrategy, led by Michael Saylor, accumulated about $3 billion worth of Bitcoin over the same period, highlighting how significant ETH’s recent accumulation has become.

This surge in institutional demand also aligns with Ethereum’s technical breakout. The price action suggests not only speculative buying but also structural changes in how the asset is being integrated into professional portfolios.

With ETFs now approved and trading on national platforms in multiple regions, the shift is viewed as an important milestone for Ethereum’s role in global markets.

Ethereum Short Squeeze and Volatility Outlook

Another factor driving ETH’s price action is the unwinding of short positions on Binance. Oinonen noted that Ethereum has long been a favored asset for traders betting on declines.

The unexpected breakout to new highs, however, triggered what he described as a “short squeeze,” forcing bearish traders to buy back ETH to cover their losses. This buying pressure amplified upward momentum and contributed to the rapid move toward $4,900.

“The market is entering what could be called a ‘short squeeze season,’” the analyst explained, adding that Ethereum’s persistent rally may continue to pressure short sellers. While this scenario supports near-term gains, it also introduces the possibility of heightened volatility as positions are unwound.

Looking ahead, Oinonen expects both Ethereum and Bitcoin to push toward further highs in the coming months, though he cautioned that a market correction could emerge between late 2025 and early 2026.

The interplay between institutional demand, ETF inflows, and derivatives market dynamics is likely to define Ethereum’s trajectory during this period.

Featured image created with DALL-E, Chart from TradingView