Ethereum Rockets Past $4,000 — Short Sellers Face $105M Liquidation as Squeeze Talk Heats Up

Ethereum (ETH) has gone past the $4,000 mark for the first time in months — and the shift has shaken the entire cryptocurrency market.

Within 24 hours, over $105 million worth of short positions were liquidated, which left traders panicking and fueling speculation whether a huge short squeeze is already in motion.

For some, it's the beginning of something huge. For others — particularly those shorting ETH — it's been a bitter reminder of how rapidly this market can reverse itself.

Why the $4,000 Mark Is Such a Big Deal

Breaking $4,000 is more than a pretty, round figure. It's a psychological landmark that has the power to change the mood of the market. When ETH breaks such a level, it tends to induce new buying — from momentum chasers to institutions spotting a technical breakout.

Ethereum has not been over $4,000 since the peaks of the previous bull run. Recapturing that mark has renewed hope, and there are some major reasons why it finally did:

Institutional buying returns —

Institutional investors are buying quietly, with many positioning prior to possible Ethereum ETF approvals.

Future upgrades —

Network upgrades that will reduce transaction fees and enhance scalability are attracting good attention.

Bitcoin surge —

BTC's move above $70,000 has boosted morale throughout the crypto universe, and ETH tends to follow in the lead.

Liquidations fueling the fire —

As ETH broke through resistance, short sellers were compelled to cover their positions, creating a feedback loop that propelled prices higher still.

The $105 Million Liquidation Surge

When traders short ETH, they’re betting on the price going down. But if it rises too quickly, those bets start bleeding money — and eventually, exchanges will close the positions to prevent further losses. That’s a liquidation.

Over the past day, $105 million worth of shorts were liquidated. And that’s just the number we can track from major exchanges — the real total could be even larger.

This type of forced purchase initiates a chain reaction:

ETH rises above resistance.

Short positions are automatically closed.

Those liquidations need to buy back ETH at higher and higher prices.

That additional buying pushes the price even higher.

This is what traders refer to as a short squeeze, and it can shoot prices through the roof in a very short period of time.

Is This Really a Short Squeeze?

Some think so. Others are of the opinion we are witnessing the confluence of factors: actual spot purchasing by bullish investors and the liquidation wave.

On-chain evidence supports the notion actual purchasing is occurring. Exchange balances of ETH have been declining, indicating coins are going to cold storage rather than residing on exchanges waiting to be sold. That's a confidence indicator long-term.

Nevertheless, the quick acceleration of liquidations can't be overlooked. Should ETH remain above $4,000 and shorts continue to pile on, we may witness the squeeze getting stronger.

Two Quite Different Attitudes in the Market

Currently, the Ethereum mob is divided into two groups:

The terrified shorts —

Traders who had taken bets that ETH would stall at $4,000 are running for the door to close losing trades.

The hyped-up bulls —

Momentum buyers and longer-term owners regard the breakout as confirmation of an uptrend and are doubling up.

That tug-of-war is part of what's sustaining volatility.

Important Price Levels to Monitor

If ETH continues to rise, keep an eye on these levels:

$4,050 – $4,100: Light resistance from recent price action.

$4,200: A previously significant level from earlier cycles.

$4,500 – $4,600: The significant zone from the 2021 top.

If the rally falters, potential support levels are:

$3,900: Close to the breakout level.

$3,750: A deeper base in case of a deeper pullback.

The Bigger Bullish Picture

Even beyond that near-term boost, Ethereum's fundamentals are strengthening:

ETF potential —

Approval could usher in billions in institutional money.

Network upgrades —

More scalability and lower fees will make ETH more competitive in DeFi, NFTs, and other applications.

Broader adoption —

Increasing numbers of businesses are constructing and incorporating Ethereum-enabled technology.

There are some traders who think that if the trend continues, ETH might be on its way to $5,000–$6,000 in the near term.

But There Are Dangers

Crypto bounces are thrilling, but they're never necessarily sustainable. Speculators need to monitor:

Global market dynamics —

A shift in interest rates or a crisis in geopolitics can withdraw money from risk assets.

Regulatory actions —

Abrupt regulatory changes to Ethereum or DeFi might slam prices.

Overleveraging —

If everybody leverages up, an unexpected fall could induce a long squeeze, destroying bullish positions.

Bottom Line

Ethereum's breakout above $4,000 is a giant moment — and for short sellers, a pricey one. The $105 million in liquidations indicates just how fast the market can punish the wrong bet.

Whether this is the beginning of a much larger rally or merely a sharp squeeze leading to a pullback, one thing's certain: ETH has everyone talking again. In a market that shifts this quickly, the victors tend to be those who navigate risk while remaining prepared for the next large swing.