TLDR:
Ethereum rally follows record short positioning and ETF accumulation.
Trump-linked $5M ETH purchase sparks institutional interest spike.
Executive order may allow 401(k) crypto exposure across the U.S..
Over $150B added to ETH’s market cap since early July surge.
Ethereum is in the middle of a market shake-up that’s forcing short sellers to fold fast.
The price has surged roughly 70% in weeks, as institutional moves and U.S. policy shifts collide. Traders betting against it are now getting wiped out. Billions are being liquidated. And if momentum holds, Ethereum might break above $4,000 soon.
Ethereum Record Short Positions Flip Against Traders
Ethereum’s rally began shortly after net short exposure hit record levels.
According to Zerohedge data shared via The Kobeissi Letter, leverage shorts were about 25% higher than February peaks. That set the stage for what is now unfolding. Ethereum has added over $150 billion in market value since July 1.
The setup looked perfect for a squeeze. Prices had been suppressed despite steady ETF flows. BlackRock reportedly added Ethereum to its fund lineup almost daily across June. However, shorts kept climbing. That created a massive imbalance, one now correcting fast.
Ethereum is making HISTORY:
We are currently witnessing one of the LARGEST short squeezes in crypto history.
Ethereum has added +$150 BILLION in market cap since July 1st, days after net SHORT exposure hit record highs.
What’s happening? Let us explain.
(a thread) pic.twitter.com/ZJ315XEIEV
— The Kobeissi Letter (@KobeissiLetter) July 18, 2025
Momentum spiked when institutional buyers joined the rally. The Kobeissi Letter noted a $5 million Ethereum purchase linked to Trump’s World Liberty Financial. This followed weeks of ETF accumulation and came as traders remained heavily short.
Those shorts are now under pressure. Liquidations are piling up. If Ethereum climbs another 10%, roughly $1 billion more could be wiped out. Leverage only adds fuel to the fire. This sudden shift is creating one of the biggest short squeezes in crypto history.
Policy Shifts Add Further Momentum to Ethereum
While price action was unfolding, U.S. policy also turned sharply pro-crypto.
According to reports, President Trump is preparing an executive order allowing 401(k) plans to access crypto. That move could unlock $8.7 trillion in retirement funds.
The news comes days after the U.S. House passed three major crypto bills: the Clarity Act, the Genius Act, and the Anti-CBDC Act. This signals growing bipartisan support for digital assets. Market watchers say candidates now need crypto backing to win elections.
While Bitcoin recently reclaimed $120,000, Ethereum and XRP are now playing catch-up. Bitcoin’s market cap has grown by $900 billion since April. But recent inflows and policy signals suggest altcoins may soon follow suit.
Traders and investors are now watching whether Ethereum can hold above recent gains. With capital flooding in, short sellers clearing out, and Washington softening its stance, momentum may continue to shift in crypto’s favor.
