Key Insights:
- ETH shorts unwind as institutional sentiment flips bullish on CME data.
- MVRV Z-score shows ETH undervalued despite 28% underperformance vs BTC.
- Onchain metrics confirm rising demand, record low exchange supply, and ETF inflows.
Ethereum appears poised for a breakout as institutional shorts collapse and on-chain demand surges. With staked supply rising and ETF inflows accelerating, ETH targets $6K as traders eye a catch-up move to Bitcoin’s rally.
Institutions Unwind Shorts as ETH Eyes Breakout
Ethereum (ETH) appeared poised for another leg higher this week, with leveraged short positions collapsing across institutional platforms and market watchers citing bullish liquidity metrics.
The Commodity Futures Trading Commission (CFTC) data showed that leveraged net Ether shorts on the Chicago Mercantile Exchange (CME) dropped sharply. According to Crypto Rover, institutional traders are now “closing their $ETH shorts,” the chart shows a shift from deeply negative levels toward neutral territory.
This short squeeze coincided with a strong rebound in Ether price. ETH hovered near $3,750 at press time, up over 60% from its May low. Calls for a $6,000 or even $8,000 price tag resurfaced across social media as traders looked to ride the momentum.
ETH “Catching Up” with Global Liquidity
A post from @TedPillows, reshared by Eric Trump, argued that Ethereum’s price should reflect broader monetary expansion. “$ETH is catching up with global liquidity,” Ted wrote, comparing Ether’s price trajectory to M2 money supply. According to the chart, ETH should be trading near $8,000 if it fully aligned with current liquidity conditions.
This argument mirrors broader sentiment around undervaluation. Glassnode’s MVRV Z-score measures how far ETH’s market cap diverges from its realized value, which remains well below historical peaks. Despite ETH no longer sitting in a bearish zone, it trades far from euphoric cycle highs.
Bitcoin has surged 74% over the past 12 months while ETH is still down 28%, widening the valuation gap. Analysts at Bitcoin Vector claim ETH is now “under-owned, undervalued, and in catch-up mode.”
Ethereum Technical Levels Point to $4K, Then $5K
On the daily chart, ETH broke above key resistance levels, forming a series of higher lows since mid-June. The pair now trades just under the $3,872 Fibonacci extension level. If bulls maintain momentum, the next upside target is $4,958, the 1.618 Fibonacci extension of the 2024 range, according to TradingView data.
ETH holds above both the 50-day and 200-day exponential moving averages (EMA), with the 50/200 EMA cross flashing a bullish signal at $2,966.
However, short-term momentum indicators showed signs of exhaustion. The Stochastic RSI hovered around 49, suggesting a potential cooldown phase before continuation.
On-chain Trends Support Bullish Thesis
Beyond charts, on-chain data suggested a structurally bullish setup. As of this week, over 34 million ETH is now staked, representing 28% of the total supply. This capital remains locked, effectively reducing the liquid supply and signaling strong investor conviction.
Only 16.2 million ETH sits on centralized platforms, its lowest level since 2016, according to Glassnode. Diminishing sell-side liquidity tends to amplify price movements in the presence of renewed demand.
That demand is picking up. Glassnode reported a 16% surge in ETH held by new buyers since early July. This uptick in short-term holders aligns with rising inflows into Ether spot ETFs, which reportedly gained over $4 billion in just two weeks.
Investor sentiment has not reached extreme levels despite rising prices and bullish flows. Glassnode’s NUPL (Net Unrealized Profit/Loss) indicator stood at 0.47 for ETH, below the “Belief/Denial” zone. For context, Bitcoin and Ripple stood at 0.57 and 0.62 in higher-risk sentiment areas, respectively.
Around 94.4% of ETH’s supply remains profitable, but the lack of euphoria suggests further upside could be sustainable.
Network Demand Underpins Value
Activity on the Ethereum network has also evolved. Average transaction fees dropped to 0.0004 ETH, a level not seen since early 2020. This decline isn’t due to falling demand, but improved efficiency, especially through layer-2 solutions.
Following the July 2025 block gas limit increase, Ethereum blocks immediately filled, mirroring past upgrades. This behavior suggests that the network was already operating near capacity, and demand remains strong.
The composition of that demand has shifted. NFTs and DeFi now occupy less blockspace and have been replaced by infrastructure DApps, rollup publishing, and stablecoin settlements. Basic ETH transfers have also risen, pointing to increasing financial activity on-chain.
Elliott Wave points to $9K target
Elliott Wave analysis from XForceGlobal, posted last month, proposed that ETH was advancing in a third impulsive wave. This stage often results in the strongest price gains during a bull cycle.
Their chart suggested a possible peak around $9,000 by early 2026, assuming macro conditions remain supportive and liquidity trends persist.
While short-term resistance remains at $4,000, broader sentiment and structural data point to Ethereum entering a late-stage accumulation breakout phase.
Disclaimer
This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.
The post Ethereum Set for $6K as Shorts Close, Liquidity and Demand Spike appeared first on The Market Periodical.
