• Ethereum reclaimed the $2,600 level, triggering $90 million in short liquidations. 
• Is ETH setting up for a sustained breakout, or another rejection?

As the broader market shifts back into bullish territory, short-sellers are being systematically flushed out across major assets.

Ethereum [ETH] followed suit. A sharp 6.78% daily gain on the 2nd of July drove ETH back to the $2,600 level, liquidating nearly $90 million in short positions in the process.

The real question now is whether ETH can convert this reclaimed level into a springboard for continuation. Risk appetite appears to be returning, elevating the stakes for Ethereum’s next move.

Why Ethereum’s short squeeze stands out

Ethereum’s daily structure reveals a clear inflection point. 

On the 12th of June, Open Interest (OI) hit a record $41.75 billion, coinciding with ETH reclaiming the $2,800 level for the first time since February.

However, beneath the surface, stress signals began to emerge. Despite steady spot demand, the number of whale wallets holding more than 10,000 ETH dropped to just 884, marking its lowest level since 2016. 

This sharp decline triggered aggressive deleveraging, with over $20 billion in OI unwound in under three weeks. The aftermath was a classic bull trap.

While Bitcoin[BTC] corrected 10.8% over the following two weeks, ETH plunged 24.6% to $2,113.

Source: TradingView (ETH/USDT)

Yet, a rebound that followed marked a key shift in price behavior.

ETH rallied 8.28% the very next day and slipped into a tight holding pattern between $2,400 and $2,500 for ten straight sessions. This kind of sideways action after a major flush often hints at quiet accumulation.

If that’s what’s playing out here, Ethereum’s clean reclaim of the $2,600 level could represent a strategic pivot, laying the foundation for a sustained breakout with real positioning behind it.

Is ETH structurally ready to break out?

As Ethereum pushes through a critical supply overhang, market structure enters a sensitive zone. 

At the time of writing, Binance’s Long/Short Ratio was locked at 50:50. That kind of balance rarely lasts, and if bears sense weakness or holding pressure, shorts could quickly take over.

This makes order book behavior especially important to watch. On the 2nd of July alone, whales rotated over $3 billion in ETH liquidity: 45,155 ETH flowed out of Kraken, while 60,000 ETH moved from Arbitrum to Binance. 

Source: CryptoQuant

Meanwhile, BlackRock continues to accumulate quietly, having added ETH-related positions on 29 of the last thirty trading days. 

Structurally, Ethereum’s fundamentals are heating up too. Daily transactions have surged to 1.45 million, on par with 2021 bull cycle peaks, while DeFi lending is up 43% this quarter, reflecting renewed capital deployment.

This backdrop reinforces that Ethereum’s breakout above $2,600 is structurally driven. If sustained, it sets the stage for another short squeeze, potentially targeting a move toward $2,800.