Ethereum Short Squeeze Setup Could Spark Major Price Rally

A surge in Ethereum futures open interest points to a huge rally. Short positions surge and a short squeeze is becoming more likely, while the Federal Reserve meets this week. It is expected to cut rates by 25 basis points further.

Rising ETH Open Interest and Aggregate Premium Data Signal Major Rally

Clearly, there has been a large increase in open interest. This is an indication that many traders are taking short positions, and a powerful short squeeze may be ahead.

However, if these positions are forced to close because of a sudden pop in price, this can initiate a sharp spike to the upside, leading to a monster rally.

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The aggregate premium data also indicates a rising demand for Ethereum futures over spot prices. This is a case of growing investor optimism or anticipation of upward price action.

If the predictions happen, you’ll have a short squeeze that may work for months, if not years. And it may be talked about in trading circles as, “What was that rally?”

And it’s that combination of open interest buildup and potential squeeze such as this one that makes Ethereum’s current setup so notable.

Analyst Predicts ETH Rally with Fed’s Expected Rate Cut This Week

Ethereum shows an upward bounce, with Market focus on a 25 basis point rate cut hint expected from the Federal Reserve If Ethereum follows the expected cut, a further upward trajectory is possible, adding more fuel into the fire for the crypto market.

Crypto analyst Michaël van de Poppe says such good conditions could also push Bitcoin into a range above $90,000-$100,000.

In addition, he mentions Ethereum’s recent recovery from a descending trend, which suggests that there is a probable trend reversal if buying pressure comes back to par. ETH is testing key support levels, and, with a healthy macroeconomic backdrop, it is possible for the token to sail further.

Ethereum Supply Shrinks as Staking Grows, Fueling Bullish Outlook

Ethereum is showing bullish signs. Holders are becoming increasingly confident, and the staking levels have reached all-time highs.

The token reserves on the exchanges are also at record lows. The withdrawal of reserves from the exchange can imply a threat of a supply squeeze. Fewer tokens for trading on the exchange are available to be traded.

The likelihood of a supply-driven price increase comes to the fore as staking and coins move off exchanges with higher rates.

This all points towards a positive outlook for Ethereum with limited supply and a potentially higher sustained long-term holding sentiment.