Breakout to $4k Imminent Amid Heavy Short Liquidation

Ethereum has surged past the key $3,000 level for the first time in 22 weeks, leading a broad altcoin market rally as Bitcoin also rockets to a new all-time high above $118,000.

Currently trading around $3,020, ETH’s powerful 7.9% daily gain was fueled by a record-breaking day for spot Ether ETFs and more than $246 million was liquidated from the leveraged Ether market, mostly involving short traders. The move has pushed Ethereum’s market cap to over $363 billion, with daily trading volume hitting $37.4 billion.

Factors fueling Ethereum price surge today

The top reason why the Ether price surged today is due to the rising demand from institutional investors. For instance, the U.S. spot Ether ETFs recorded the highest daily cash inflow of about $383 million, led by BlackRock’s ETHA.

The demand for Ethereum by institutional investors has significantly increased in the recent past, with some corporations adding ETH to their balance sheet. For instance, the board of directors of NASDAQ-listed GameSquare approved a $5 million Ether purchase, thus adding 1818 ETH to its balance sheet.

Ethereum price also gained bullish sentiment today fueled by rising futures and Open Interest (OI) amid notable spot demand. With the heavy liquidation of short positions, which triggered a short squeeze amid rising trading volume, Ether’s OI surged to nearly $40 billion today.

What’s Next for ETH Price?

Ethereum price has led the wider altcoin market in regaining bullish momentum, possibly signaling the onset of the much-anticipated 2025 altseason. The ETH/BTC pair has continued to rally in the past three weeks, suggesting heightened capital rotation from Bitcoin to the altcoin market.

Furthermore, Bitcoin’s market dominance has been hinting at an imminent reversal after forming a rising wedge pattern year-to-date. In the historical four-year crypto bull cycle, the macro altseason kicks in every time the BTC dominance gets trapped in a falling trend, especially in the higher time frames.

From a technical analysis standpoint, ETH price has approached a crucial resistance level of around $3k for the first time since U.S. President Donald Trump escalated the global trade wars earlier this year. According to crypto analyst alias Clifton Fx, Ether price is on the verge of a bullish breakout from a daily megaphone structure, which has a midterm target of $4k.

The bullish narrative for Ether price is bolstered by the daily Relative Strength Index (RSI) which rallied above the 70 level earlier on Friday. Additionally, the daily MACD indicator signaled bullish sentiment after the MACD line crossed above the zero line amid increasing bullish histograms.

The midterm bullish sentiment for Ether price can only be invalidated if the altcoin retraces and consistently closes below the support range between $2,150 and $2,400.