Today, the cryptocurrency market is on high alert. Traders are keeping a close eye on Ethereum as there could be major price changes in the near future. If ETH rises above $3,500, over $3 billion of short positions could be wiped out. Such a move could shake up the entire market.
Why is the $3,500 level so important?
A short position is a bet that the price will fall. Many traders are currently betting on Ethereum. They expect ETH to fall, not rise.
However, if the price rises in the opposite direction, these traders will have to close their positions. They do it by purchasing ETH. If thousands of traders rush to buy at the same time, the price can rise even higher. This chain reaction is known as a short squeeze.
That’s why $3,500 is a huge amount. Exceeding this level could trigger a multibillion-dollar compulsory purchase.
What is creating this pressure?
Many traders have opened short positions near the current price range. They believed that ETH would face strong resistance and fall. However, the market remained strong.
Ethereum also has a small supply on major exchanges. More and more people are holding their tokens instead of selling them. When demand increases while supply decreases, prices tend to rise. This makes short squeeze more likely.
Market analysts say the setup is unusual. A large amount of short positions have been accumulated, but buying interest is also strong. This combination often creates fast and unpredictable movements.
What happens if the shorts are liquidated?
If ETH rises above $3,500, this move could cause a number of repercussions.
- Many traders may rush to buy to cover their shorts.
- Prices can skyrocket in a short period of time.
- Volatility is likely to increase as both sides of the market react.
- Emotions may change from fear to excitement.
A short tightening does not necessarily last long. Prices can rise quickly, but they can also fall again once pressure subsides. Traders should be careful.
What to watch out for next
For a squeeze to occur, Ethereum would need to break above $3,500 with strong momentum. If that fails, the price is likely to remain in the current range. Global market news, interest rate updates, and crypto regulations can also influence next moves.
For now, the market is waiting. A single failure can result in billions of dollars in liquidations. Regardless of whether there is an Ethereum short squeeze or not, traders know for sure that volatility is on the way.
