Source: Wall Street Journal.
Short squeeze, technological upgrades, and shareholding by 'whales' are three major driving forces that together ignite the market.
Recently, Ethereum (ETH) has rapidly become the market focus thanks to an astonishing upward trend.
In just 72 hours, the price of ETH surged over 40%, reaching the $2600 mark, achieving the best three-day performance since 2019 (when the price was below $200), significantly outperforming other major Digital Currency Assets like Bitcoin.
Behind this strong market rally are not only the boost from macro factors but also three major drivers: technological upgrades, short squeezes, and increased Shareholding by large investors.
1. Macroeconomic tailwinds and technological upgrades: Laying the foundation for the rise.
Ethereum's strong performance primarily benefits from its inherent technological advancements and improvements in the external macro environment.
On May 7th, Ethereum successfully implemented the Pectra upgrade, introducing a series of key technological improvements.
This upgrade introduced significant improvements including a higher staking cap and account abstraction (EIP-7702 standard), significantly enhancing the usability and flexibility of the Ethereum network. This technological upgrade not only brought substantial functional enhancements but also injected new confidence into investors, becoming an important technical foundation for this round of increase.
On a macro level, the new trade agreement announced between the US and UK on May 8th, along with the subsequent launch of trade talks between China and the US, significantly boosted market risk appetite and created a positive atmosphere for the cryptocurrency market, including Ethereum.
2. "Short Squeeze" Boosts the Market
Since May 8th, a typical "short squeeze" scenario has played out in the Ethereum futures market, significantly driving the market.
Data shows that since May 8th, there has been large-scale short position liquidation in the Ethereum futures market, with a settlement amount as high as $0.43794 billion, far exceeding the long liquidation amount of $0.21129 billion during the same period.
The sharp price increase forced short sellers to buy ETH to cover their positions, further pushing up the coin price and creating a typical "short squeeze" upward spiral.
Meanwhile, the total value of Ethereum's open contracts surged from $21.28 billion on May 8 to $26.77 billion on May 10, and the weekly funding rate for Ethereum perpetual futures also rose from 0.10% to 0.15%.
These two indicators together suggest that more traders are entering the market and opening new positions, and that long traders are willing to pay additional fees to maintain their positions, further confirming the bullish sentiment among Ethereum futures traders.
3. "Whales" actively accumulate: reinforcing bullish expectations.
On-chain data reveals that "whale" addresses holding over 10,000 ETH have quietly engaged in large-scale strategic shareholding before this price surge.
According to Glassnode data, since late April, the net position of these whale addresses has turned positive and has steadily increased their holdings.
The total supply of ETH held by these large entities has risen to its highest level since March 2025, exceeding 40.75 million ETH.
"Whales" continuing to accumulate positions is typically interpreted by the market as a sign that large, informed investors have strong confidence in the future market, and their active positioning undoubtedly injects a strong boost into the entire Ethereum market, reinforcing bullish expectations.
Editor/jayden
