Key Takeaways:
- $90M in shorts were liquidated as Ethereum reclaimed the $2,600 level.
- Whale and institutional activity indicates strong underlying support and positioning.
- Network activity and DeFi metrics are surging, reinforcing ETH’s bullish momentum.
Ethereum [ETH] is once again in the spotlight after a sharp rally saw it surge 6.78% on July 2, reclaiming the $2,600 level and triggering a wave of liquidations that wiped out nearly $90 million in short positions. With the broader crypto market showing signs of renewed bullish sentiment, the critical question is whether Ethereum’s rebound marks the beginning of a sustained breakout.
Ethereum’s Short Squeeze: A Deeper Market Signal
The recent ETH short squeeze is more than just a flash move—it’s a symptom of deeper shifts in market structure. On June 12, Ethereum’s Open Interest (OI) peaked at a record $41.75 billion, coinciding with a return to the $2,800 price level. But beneath the rally, cracks began to appear. Whale wallets holding more than 10,000 ETH dropped to 884—the lowest count since 2016—sparking a cascade of deleveraging. Over $20 billion in OI was unwound in less than three weeks.
That deleveraging resulted in ETH plummeting 24.6%, while Bitcoin shed just over 10%. But Ethereum’s rebound—an 8.28% surge followed by a tight 10-day consolidation between $2,400 and $2,500—suggests that a phase of stealth accumulation may now be underway.
Whale Activity and Exchange Flows Offer Crucial Clues
July 2nd marked a pivotal day for Ethereum’s liquidity dynamics. Whales shuffled over $3 billion worth of ETH across major platforms. Notably, 45,155 ETH was withdrawn from Kraken while 60,000 ETH was moved from Arbitrum to Binance—potentially indicating rotation strategies ahead of a larger move.
BlackRock’s quiet but consistent accumulation also underpins this shift. The asset manager has added ETH-related exposure on 29 of the last 30 trading days, hinting at long-term institutional confidence.
Meanwhile, Binance’s Long/Short Ratio sitting evenly at 50:50 suggests that market participants remain cautious—but that balance rarely holds for long. Any shift in sentiment could rapidly amplify price moves in either direction.
Structural Strength: DeFi and Transaction Metrics Are Surging
Ethereum’s network fundamentals are also flashing green. Daily transactions are now averaging 1.45 million—levels not seen since the 2021 bull run. DeFi lending protocols have seen a 43% spike in activity this quarter, highlighting increased capital deployment and risk appetite.
This combination of technical resilience, institutional flows, and strengthening on-chain metrics paints a compelling picture. If Ethereum can maintain support above $2,600, it could trigger another wave of short liquidations and open the door to a retest of the $2,800 resistance.
Ethereum’s current price action, whale activity, and on-chain fundamentals suggest that the recent bounce may be more than a dead-cat rally. If support at $2,600 holds, the stage is set for a structurally driven breakout.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
Also Read: BlackRock’s ETHA Dominates Ethereum ETF Inflows as Institutions Ramp Up ETH Accumulation
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
