That’s an extreme buildup of bearish bets. If $ETH starts pushing higher, this crowded short positioning could quickly turn into fuel for a sharp short squeeze.
To see whether this squeeze could happen, it’s important to see what’s driving this bearish positioning.
Technically, $ETH is pressured by the big supply wall between $2,722 and $2,822, where more than 13.3 million $ETH have changed hands.
Moreover, $ETH declined by about 1.5% this week after the breakout above $2.8k last week, which suggests that selling pressure is clearly intensifying. In this case, the rising shorts indicate traders are betting on $ETH’s inability to surpass this resistance.
But what if $ETH breaks through $2.8k? If bulls step in, this massive buildup of shorts could turn into a perfect bear trap. Short sellers may then be forced to cover, adding more buying pressure and potentially giving Ethereum the momentum to push toward $3k.
On-chain signals strengthen Ethereum’s bear trap setup
Ethereum’s post-Hegotá upgrade might just be one piece of the puzzle.
In his latest tweet on X, Vitalik Buterin outlined Ethereum’s transition to a more general blockchain architecture and an upgrade to make the blockchain more scalable, secure, and private.
Such a roadmap may come at the most needed time, given the ongoing large-scale accumulation of $ETH by on-chain whales.
According to on-chain analytics, the number of $ETH accumulated by whales is up 21.4% within the last seven days and reached 321k $ETH as of now. At the price of $2.7 million, the total value of the accumulation sums up to $864 million.
But whale buying is not the only sign pointing to a growing demand for Ethereum.
As can be seen in the chart above, staked $ETH has hit a new all-time high of 43.5 million $ETH, or over 35.6% of the total supply.
In addition to that, there has been an influx of more than 500,000 $ETH into staking in the past week alone, meaning $ETH is actively being locked away instead of being used for trading.
Together, the rise in both whale accumulation and record-breaking staking activity is a sign that investors are buying into $ETH for the long term.
Against this backdrop, the post-Hegotá upgrade could become another catalyst to keep this momentum going.
Thus, the 13,000% increase in short positions becomes more interesting. While traders are buying bearish bets, whales acquire more $ETH that is staked.
If bulls penetrate key resistances, this crowded positioning will lead to a bear trap that forces shorts to cover and provides the fuel for $ETH to reach $3k in October.
Final Summary
- Ethereum shorts jumped 13,000%, while whales continue to accumulate and staking hits record highs.
- A break above $2.8k could trap bears, forcing shorts to cover and pushing $ETH toward $3k in October.
