Key takeaways
Could Ethereum soon cause a short squeeze?
Yes, over $9.5 billion in ETH short positions could be liquidated if prices rise 20%, making upside volatility likely.
Are smart money and traders buying Ethereum again?
Yes, even panic sellers are buying back ETH at higher prices.
Ethereum [ETH] could be approaching a key turning point, with approximately $9.5 billion in short positions at play. A 20% price jump could trigger widespread sell-offs, making a rally the “path of maximum pain” for traders betting against it.
At the same time, on-chain data showed that even the hackers who panic-sold during last week’s crash have been buying back ETH at higher prices.
With Ethereum competing closely with Solana [SOL] Regarding the dominance of DEX volumes, market sentiment seemed to turn cautious, yet optimistic.
A brief squeeze on the horizon
Ethereum’s currency liquidation map showed an asymmetric setup: roughly $9.5 billion in short positions could disappear if ETH recovers just 20% from recent levels, while only $2.6 billion in long positions face liquidation in a similar bearish move.
The data showed that short liquidations were accumulating concentrated around the $4,100 to $4,200 zone, so any upward momentum could trigger cascading buy orders.
Source: X
The accumulated short leverage was vastly outweighed by the long positions. The path of “maximum pain” – and potential volatility – leans upward.
Panic selling turns expensive as smart money buys the dip
Source: X
During the sell-off-induced crash, hackers dumped 8,638 ETH (worth $32.5 million) at $3,764. They realized a $5.5 million loss in the chaos.
But as prices recovered, the same wallets bought back 7,816 ETH for $32.5 million at $4,159. They effectively bought back at higher prices, demonstrating how sharp market setbacks punished emotional sellers.
Meanwhile, Solana and Ethereum dominated Q3 DEX volumes, maintaining their lead as the top networks for trading activity.
Source: X
The change is proof of the resilience of the DeFi market. Even during record sell-offs, liquidity concentration and opportunistic buying on major chains helped pave Ethereum’s path to recovery.