$331 Million in Liquidations Could Hit as ETH Approaches $4K, Driven by Bearish Positioning

Ethereum Eyes $4K as Short Squeeze Threat Builds and Capital Shifts from Alts

July 21, 2025 — Ethereum is rapidly approaching the $4,000 level, driven by bullish momentum, aggressive capital inflows, and a mounting pile of short positions that could trigger a sharp liquidation cascade.

ETH is trading at approximately $3,755, posting a 5.7% gain in the past 24 hours and up over 25% on the week, according to CoinDesk data. The rally, which has surprised many market participants, is gaining strength despite skepticism — and some analysts argue it could be setting the stage for a violent short squeeze.

“$ETH is the most hated rally right now,” noted Crypto Banter on X, referring to the heavy bearish positioning across derivatives markets. Data from CoinGlass shows that over $331 million in short positions stand to be liquidated if ETH crosses the key $4,000 threshold — a move that could accelerate upside in a feedback loop of forced buying.

Analysts are also pointing to a deeper trend beneath the price action: a rotation of capital away from smaller altcoins and into Ethereum. Pseudonymous trader Pentoshi cited the steepest weekly drop in Bitcoin dominance in four years as evidence of this rotation. “Enjoy the next few weeks,” he posted, describing the move as a “melt up” — a rapid, FOMO-driven rally untethered from short-term fundamentals.

Pentoshi also highlighted a growing structural driver: the rise of Ethereum-focused treasury strategies. “ETH treasury companies are barely a month old and already competing to acquire 1% of the total supply,” he said — likely alluding to publicly traded firms such as Bitmine Immersion Technologies and SharpLink Gaming, both of which have recently made large-scale ETH purchases.

Adding to the outlook, analyst Benjamin Cowen emphasized Ethereum’s growing market share relative to altcoins. “Alt/BTC pairs are moving, but ETH/BTC is leading,” he wrote, suggesting that Ethereum is behaving similarly to Bitcoin during past market cycles — becoming the lower-risk, higher-conviction asset among digital tokens.

As Ethereum closes in on the $4,000 mark, traders are watching closely. Whether the next move is driven by technicals, liquidations, or institutional demand, one thing is becoming clear: Ethereum is reclaiming leadership in the current phase of the crypto market.