Ethereum has shown signs of strength following a volatile week in which over $500 million in short positions were wiped from the market. As the dust settles, traders and analysts are now closely watching a key technical signal that could determine the next major move for ETH.
Despite ongoing global tensions and uncertainty in the broader crypto market, Ethereum has managed to hold above the $2,400 level—a potentially bullish setup for what some see as the beginning of a trend reversal.
Major Short Squeeze Clears the Deck
On June 16, Ethereum witnessed a significant liquidation event, with short sellers facing losses totaling around $500 million. This type of short squeeze, where aggressive bets against the asset are forced to close out at higher prices, typically clears excess leverage and resets the market’s structure.
Data from derivative exchanges showed that the estimated leverage ratio dropped notably following the event. This drop suggests that the market has flushed out speculative overexposure, offering a cleaner setup for a potential move higher.
At the same time, despite the pressure from global uncertainties, Ethereum maintained stability above $2,400. This resilience—paired with a calmer derivatives market—has given bulls a reason to stay optimistic.
Key Moving Average May Define the Breakout
According to technical analysis shared by CryptoQuant contributor İbrahim Cosar, Ethereum is approaching a decisive moment on the weekly chart. The 50-week Moving Average (MA), which has historically served as a critical resistance point, is once again in focus.
Ethereum’s previous significant rallies in October 2023 and November 2024 both began after the asset closed a weekly candle above this moving average. Right now, ETH remains below it but is consolidating just underneath. If it manages a sustained close above the 50-week MA, it could signal the start of a fresh bullish trend.
Traders are watching this level carefully, with many viewing a breakout above the MA as confirmation of long-term upside potential.
Seller Exhaustion Hits 18-Month Low
Beyond price action and technical resistance, Ethereum’s fundamentals are also flashing encouraging signals. The Seller Exhaustion Constant, an on-chain indicator that combines volatility and the percentage of supply in profit, has dropped to its lowest level in 18 months.
This metric evaluates whether current price levels represent a low-risk buying opportunity. When both volatility and the share of profitable coins are low, it implies that most speculative participants have already exited and long-term holders dominate the market.
Currently, the Seller Exhaustion Constant matches its January 2024 low—an area that preceded a multi-month rally. This drop reinforces the idea that Ethereum may have already formed a market bottom and is preparing for its next leg higher.
ETH Still Underperforming Against Bitcoin
While Ethereum’s individual indicators appear bullish, it continues to lag behind Bitcoin in terms of performance. The ETH/BTC Spend Output Profit Ratio (SOPR), which measures the profitability of spent coins, remains below 1. This indicates that ETH holders, on average, are realizing smaller profits—or greater losses—compared to BTC holders.
The SOPR metric briefly turned positive in April, but has since fallen back below 1. This persistent underperformance has kept Ethereum from leading the crypto market’s momentum. However, if Bitcoin enters a consolidation phase near $100K, it could give ETH the room it needs to catch up.
What’s Next for Ethereum?
The path forward for Ethereum depends on how it performs against key technical and psychological levels. The $2,400 support level has held firmly, and the $2,500–$2,600 range now represents immediate resistance. A weekly candle close above the 50-week Moving Average could trigger renewed buying interest.
Additionally, the structural reset from the short squeeze, paired with record-low selling pressure, paints a constructive outlook for long-term investors. If spot demand returns and leverage remains under control, Ethereum could be preparing for a steady climb in the weeks ahead.
That said, Ethereum must also overcome its relative weakness to Bitcoin. Institutional capital continues to favor BTC—especially with growing ETF participation—and ETH’s underperformance remains a concern for investors looking to maximize returns.
Still, with historical patterns pointing to a possible bottom, and market leverage at reduced levels, Ethereum appears to be building a strong foundation.
Final Thoughts
Ethereum’s recent recovery following a $500 million short liquidation may represent more than just a bounce. Combined with on-chain metrics suggesting seller exhaustion and a technical setup near a pivotal moving average, the conditions are forming for a potentially significant move.
While ETH still lags behind Bitcoin, its resilience at $2,400 and signs of a low-risk bottom offer a bullish setup for the months ahead. The next few weekly closes could be critical in determining whether Ethereum will break through resistance and reclaim its leadership role in the crypto market
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