Ethereum’s 29% Rally Was Powered by ETF Buying and a Short Squeeze

Ethereum’s August rally was not driven by a single headline. The strongest evidence points to a feedback loop: heavy spot-ETF buying added demand, a reduced readily tradable supply made that demand more powerful, and rising prices forced short sellers to buy back ETH. The result was a 29.8% seven-day gain and a reported peak near $2,546. 4

That momentum did not last uninterrupted. After ETH moved above $2,500, profit-taking, overbought technical readings and leveraged-position liquidations helped push the price back toward the $2,375–$2,430 area. 3337

The ETF flows that started the move

The clearest fundamental catalyst was the acceleration in U.S. spot Ethereum ETF inflows.

On August 19, the products reportedly recorded $189.15 million in net inflows, their strongest single-day intake since October 28, 2025. BlackRock’s iShares Ethereum Trust, traded under the ticker ETHA, accounted for about $122.12 million—roughly 65% of the session’s total. 86

The buying continued on August 20. Reports put total net inflows at approximately $220.8 million, with ETHA contributing about $173.3 million. That was described as the largest daily inflow in roughly 203 trading sessions. 315

Across the week ending August 21, estimates placed aggregate spot-Ethereum-ETF inflows near $697.2 million, with inflows reported on five consecutive trading days. 1 The exact weekly total varies by source and counting period, but the direction is consistent: ETF demand strengthened materially during the rally.

How ETF demand became a short squeeze

Spot buying and derivatives positioning can reinforce each other. When new buyers absorb available ETH, sellers may need to accept higher prices to find liquidity. If traders are simultaneously holding leveraged short positions, a move through their liquidation levels can force exchanges to close those positions by buying ETH.

That forced buying can push the price higher, triggering more liquidations in a chain reaction. Reports attributed Ethereum’s move toward $2,546 to the combination of ETF demand, squeezed shorts and a smaller pool of readily tradable coins. 4

The available evidence supports a substantial liquidation event, but it does not reliably establish the broader “multibillion-dollar short squeeze” figure. The better-supported description is a large, leverage-amplified rally rather than a precisely measured multibillion-dollar squeeze.

The 50,000-ETH Hyperliquid short

The most vivid example of the squeeze was the liquidation of a large ETH short on Hyperliquid.

The ENS-linked wallet pension-usdt.eth held a short of approximately 50,000 ETH, representing roughly $106 million to $108 million in notional exposure. Hyperliquid records cited by multiple reports show the position being forcibly closed in five stages over about 12 seconds, between 04:51:03 and 04:51:15 UTC on August 20. 171822

Reports differ on the final loss. Some place it near $23.92 million or “nearly $24 million,” while other tracking reports estimate realized losses of about $26.66 million. 2218 Those figures should not be presented as a single settled number without access to the underlying account-level calculation. The defensible conclusion is that the short lost roughly $24 million to $26.7 million during the rapid ETH advance.

The event was a leverage liquidation on a trading venue, not evidence of a failure in Ethereum’s base network. 18

Why ETH pulled back below $2,430

The weekend retreat was a predictable vulnerability after such a fast move. ETH briefly exceeded $2,500, then fell toward the $2,375–$2,430 range as traders took profits and leveraged positions were closed. 437

One report attributed about $264.92 million in ETH liquidations to the broader move, while other coverage described roughly $265 million in long liquidations. 437 Because the supplied evidence does not include a primary liquidation-data export, that figure is best treated as a reported estimate rather than an independently verified total.

Technical indicators also warned that momentum had become stretched. Coverage cited 14-day RSI readings ranging from approximately 78 to 88, depending on the data feed and timestamp, with other momentum measures also described as overbought. 3833 Those readings can signal that a pause or pullback is becoming more likely; they do not, by themselves, identify a long-term top.

Supply conditions amplified the demand shock

The rally also arrived against a reportedly tighter immediately available ETH supply. One report estimated that exchange-held ETH fell from about 7.7 million in early June to 6.54 million by mid-August, a decline of roughly 15%. 35

Other coverage described exchange reserves as low and staking as high. 33 Both conditions can reduce the amount of ETH readily available for immediate trading, although exchange transfers and staking balances do not prove that coins have permanently left the market or that holders intend to accumulate.

This distinction matters. A wallet withdrawal may reflect long-term custody, an internal transfer or collateral management. On-chain movements can show positioning changes, but they cannot alone establish whether a particular holder is bullish or bearish.

Whale activity was mixed, not uniformly bullish

Reports described large holders withdrawing more than 150,000 ETH from Binance in recent weeks, a pattern that may be consistent with accumulation or movement into custody. 16 At the same time, the large leveraged short on Hyperliquid represented a directly bearish position that was eventually forced closed. 17

Taken together, the wallet data does not tell a simple “whales are buying” story. It shows a market with both long-term supply movement and aggressive short-term leverage. That combination can produce larger moves in either direction when liquidity is thin.

What the available evidence says about regulation

The supplied reporting does not adequately verify a specific SEC action or an imminent “CLEAR Act” development as a direct cause of the August rally. Regulatory headlines may influence crypto sentiment, but a causal claim here would require official SEC, congressional or legislative-tracking documentation that is not included in the available evidence.

The same caution applies to precise moving-average levels and exact RSI readings: those figures depend on the chart, timeframe and timestamp. They should not be treated as universal market facts.

Could Ethereum test $3,000 next?

A period of consolidation would be plausible after a near-30% weekly advance and a major liquidation wave. The key question is whether the market can retain the demand that powered the move after short positions have been cleared and early buyers have taken profits.

Continued positive ETF flows, persistently low exchange-held supply and a sustained recovery above the former $2,500 area would strengthen the case for another leg higher. A later move toward $3,000 is therefore a conditional scenario—not a forecast—and would require confirmation from price and flow data rather than the rally alone.

For now, the August move is best understood as a supply-and-leverage event built on real ETF demand: institutional-style spot buying created the initial pressure, short liquidations accelerated it, and overbought conditions exposed the market to a sharp reset.