Ethereum Surges to $4000: What Exactly Happened?

Source: The Kobeissi Letter

Ethereum is Making History:

We are witnessing one of the largest short squeezes in cryptocurrency history. Since July 1st, Ethereum's market cap has surged by $150 billion — just a few days ago, net short positions hit an all-time high.

What exactly is happening? This article breaks it down for you.

Take a look at the chart below:

According to Zerohedge data, as we entered July, Ethereum's net leveraged short positions hit a historical peak. In fact, the net short exposure was about 25% higher than the level in February 2025. This directly led to Ethereum's 70% surge in less than a month.

But the story is far from over.

President Trump's World Liberty Financial institution has been consistently adding to its Ethereum holdings. The latest transaction records show that just 24 hours ago, the institution completed a $5 million purchase. This has added fuel to the already intense short squeeze.

It is worth noting that these short positions mostly come from institutional capital.

Even more intriguing:

Zerohedge reports that in the 30 days prior to July 1st, the BlackRock ETF had been increasing its Ethereum holdings for 29 days. However, as mentioned earlier, due to a sudden surge in leveraged short exposure, the price continued to decline. Clearly, some "smart money" foresaw this storm.

We are now witnessing billions of dollars in short positions being liquidated in a domino effect. If Ethereum rises another 10%, another $1 billion in short positions will be liquidated.

Furthermore, as these short positions are mostly leveraged, the market is facing even stronger selling pressure.

Ethereum could soon reach $4000.

We are also seeing a similar effect on Ripple, while Bitcoin continues to show relative strength. Bitcoin has officially crossed the $120,000 mark again, and its market cap has increased by $900 billion since the April low. After months of stagnation, Ethereum and Ripple are finally starting to catch up with Bitcoin's gains.

We foresaw this trend in advance. Here is a partial early warning for our premium members: We averaged down at $80,000, $90,000, and $100,000 price levels and accurately predicted the $115,000 target. Last week, we revised the target to $120,000+, and it has just been achieved at this moment.

More importantly, the market is digesting the groundbreaking report released today by the Financial Times. President Trump is set to sign an executive order this week allowing 401k retirement plans to invest in cryptocurrency. This will be one of the most monumental bullish factors in crypto history.

By the first quarter of 2025, the U.S. 401k retirement market size will reach a staggering $87 trillion. Currently, the total market capitalization of cryptocurrency is only $3.8 trillion. This means that funds equivalent to 2.3 times the entire crypto market size are about to enter. This is epoch-making.

Even more significantly, the U.S. House of Representatives has passed three important Bitcoin and cryptocurrency bills: the Clarity Act, the Genius Act, and the Anti-Central Bank Digital Currency (CBDC) Act.

The biggest victory for the cryptocurrency industry is gaining bipartisan support. Candidates who refuse to embrace cryptocurrency can no longer win elections.

As we have always emphasized, institutional capital can no longer ignore cryptocurrency. Over the past 13 years, Bitcoin has had a staggering +90% compound annual growth rate, outperforming almost all assets globally.

We continue to receive feedback from institutional investors indicating that their assets under management (AUM) are gradually being allocated to crypto assets.

Looking ahead, the core logic driving the rise of cryptocurrency will trigger a major macroeconomic transformation, redefining the operational paradigm of the financial markets.

And last but not least, don't forget the strongest bull market engine for cryptocurrency—the U.S. deficit spending crisis. Not only has Bitcoin risen by 55% since April, but the U.S. dollar index has also fallen by 10% this year. The dollar is in a perpetual bear market.

Original Article Link

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia