Ethereum (ETH) has made a strong comeback, crossing the crucial $3,000 mark for the first time in 22 weeks. The second-largest cryptocurrency by market cap has gained 7.9% in the last 24 hours, now trading at around $3,020. This rally comes amid massive short liquidations, rising institutional demand, and positive technical indicators. Here’s a breakdown of what’s driving Ethereum’s rise and what could be next.
Institutional Inflows Lead the Charge
One of the biggest drivers behind Ethereum’s recent surge is the increasing interest from institutional investors. The U.S. spot Ether Exchange-Traded Funds (ETFs) just had their best day yet, recording a cash inflow of approximately $383 million. BlackRock’s ETHA led the inflows, signalling growing confidence from large-scale investors.
Moreover, publicly listed companies are starting to add Ether to their balance sheets. GameSquare, a NASDAQ-listed firm, recently approved a $5 million ETH purchase, adding 1,818 ETH to its holdings. These developments suggest that Ethereum is not just a retail investment anymore, it’s gaining traction as a serious institutional asset.
Heavy Short Liquidation Triggers Price Spike
Another major factor that contributed to the rally was the liquidation of short positions in the leveraged Ether market. Over $246 million worth of short trades were wiped out in just one day, causing a short squeeze that pushed prices even higher.
This short squeeze occurred as trading volumes soared to $37.4 billion, with Ethereum’s open interest (OI) in the futures market climbing close to $40 billion. The increase in OI, coupled with growing spot demand, indicates that the market is entering a strong bullish phase.
Technical Breakout in Sight
From a technical standpoint, Ethereum has broken through a crucial resistance level and is showing signs of a potential breakout towards $4,000. According to popular crypto analyst Clifton Fx, ETH is forming a “megaphone structure” on the daily chart, a bullish pattern that points to a midterm target of $4,000 if the breakout confirms.
Further adding to the bullish sentiment is the Relative Strength Index (RSI), which recently crossed the 70 mark, suggesting strong momentum. The Moving Average Convergence Divergence (MACD) indicator also supports a bullish outlook, with the MACD line moving above zero and rising histogram bars indicating increasing buying pressure.
Altseason Signals Emerging
Ethereum’s rally may be the beginning of a broader altcoin season, often referred to as “altseason.” The ETH/BTC pair has been trending higher for the past three weeks, signalling capital is rotating from Bitcoin into Ethereum and other altcoins.
Bitcoin dominance, which measures BTC’s share of the total crypto market, is also showing signs of a reversal. It has formed a rising wedge pattern on higher timeframes. Historically, when Bitcoin dominance falls, altcoins like Ethereum tend to outperform.
If the pattern continues, Ethereum could play a leading role in kicking off the anticipated 2025 altseason.
What to Watch Next
Despite the optimism, Ethereum still faces key levels to hold. The current bullish trend would be invalidated if ETH consistently falls below the support zone between $2,150 and $2,400. However, with strong momentum, increasing institutional demand, and positive technical patterns, the outlook remains positive in the short to mid-term.
If Ethereum can maintain its momentum and break above the current resistance levels, a move towards $4,000 seems likely in the coming weeks.
Ethereum’s price surge above $3,000 marks a significant milestone, driven by institutional inflows, short liquidations, and strong technical signals. As market conditions continue to align, ETH could be setting the stage for a breakout to $4,000 and potentially signal the start of the next altcoin rally. Investors will be closely watching whether Ethereum can hold its gains and build on this bullish momentum.
