- A report by The Kobeissi Letter indicates Ethereum’s (ETH) recent price surge has coincided with a record high in net short positions.
- Anticipation is building for Ethereum to potentially reach $4,000, fueled by increasing participation from institutional investors.
Previously, this publication analyzed Ethereum’s (ETH) potential rise toward $3,000, highlighting its capacity to test the $4,000 mark soon. We suggested that breaking decisively above $2,700 could trigger a significant market rally for the digital asset.
At that juncture, ETH’s price held above $2,500, while its Relative Strength Index (RSI) showed a decrease from 70 to 66.
Currently, Ethereum has successfully overcome many prior obstacles and is trading above $3,600. Furthermore, it has demonstrated significant growth, recording a 44% increase in its monthly price, ascending from a low of $2,116 within that timeframe.
Ethereum (ETH) Net Short Leverage: An Update
Commenting on this impressive performance, The Kobeissi Letter, a respected voice in global financial markets, noted that Ethereum’s market capitalization has expanded by a considerable $150 billion since July 1st.
In a series of posts on X, The Kobeissi Letter elaborated that the beginning of the month saw a significant short squeeze, largely driven by institutional investment.
The posts further highlighted that the level of net short exposure was considerably elevated leading into July, exceeding February 2025 levels by approximately 25%.
Adding further momentum to the ongoing short squeeze, reports indicate that President Donald Trump’s World Liberty Financial (WLF) invested an additional $5 million in ETH within the last day. This is in addition to the 14,403 ETH previously acquired by the firm.
The Kobeissi Letter suggests that another 10% increase in the price of ETH could trigger the liquidation of an additional $1 billion in short positions.
What About Bitcoin and Other Altcoins Like XRP?
Other leading cryptocurrencies, including XRP and Bitcoin, have also experienced significant rallies. According to market analysts, Bitcoin’s market capitalization has increased by approximately $900 billion since April. The market may not have fully accounted for other potentially bullish developments. One such development is the recent suggestion that Trump may soon issue an executive order allowing 401(k) retirement plans to allocate funds to cryptocurrencies.
The Kobeissi Letter also points out the substantial potential impact of this, considering that US 401(k) plans held a massive $8.7 trillion in assets during the first quarter of 2025 (Q1 2025).
Furthermore, the market is seemingly yet to fully factor in the recent passage of three key pieces of Bitcoin and cryptocurrency legislation, as reported previously. The Clarity Act, the Genius Act, and the Anti-CBDC Act are considered positive developments for the industry.
Looking ahead, analysts project that ETH could potentially conclude this cycle with a peak price exceeding $10,000. As previously discussed, one analyst believes that ETH could replicate its 2017 cycle, experiencing a 26,000% increase. However, analysts at Standard Chartered have presented a more conservative outlook. As mentioned in our previous reporting, they have revised their projection from $10,000 to $4,000.