Ethereum [ETH] has been flexing its muscles again, outshining other altcoin sectors and reminding traders why it’s still the undisputed king of smart contracts. While gaming tokens, AI plays, and staking coins stumbled into losses, ETH surged ahead, pulling capital rotation in its favor.
Compared to Layer 2s (L2s) and DeFi projects, Ethereum has maintained the upper hand this month, reclaiming leadership even after a brief mid-August slip. AI and DePin tokens gave it a chase, but by the end of the month, ETH was back in front.
The message is clear: when the crypto market is in doubt, it still bets on Ethereum.
Ethereum Price action: Eyeing the $5,000 level
On the charts, ETH hasn’t been shy. The coin wicked up to $4,900 before being rejected, brushing dangerously close to a breakout that could have flipped the narrative. After testing support near $4,300, ETH quickly rebounded to the $4,300 range, locking in a modest 13% gain.
But here’s where things get juicy: with $7.23 billion in short positions hanging in the balance, any upward push could set off a liquidation squeeze powerful enough to rocket ETH to $5,000. Traders are watching these clusters closely because, historically, ETH doesn’t need an engraved invitation to punish over-leveraged shorts.
Whales, BlackRock, and a supply crunch
It’s not just retail traders buying the dip, whales and institutions have been scooping up ETH like it’s on clearance. Nearly 30% of all ETH is now staked, tightening supply further and setting up the perfect recipe for a squeeze.
BlackRock alone reportedly added $1 billion worth of ETH in just one week. And one daring whale on Hyperliquid opened a 25x leveraged long at $4,380, stacking a $4.39 million bet that ETH isn’t slowing down anytime soon. Bold? Absolutely. Reckless? Possibly. Profitable? We’ll find out soon enough.
On-chain data: Ethereum stays hot
Beyond price action, the fundamentals scream momentum. Monthly transactions just hit an all-time high of 46.99 million, with a full day still to spare. DEX trading volume clocked $135 billion, Total Value Locked (TVL) surged to $240 billion, and active wallet addresses crossed the 15 million mark.
With these kinds of numbers, ETH isn’t just leading, it’s widening the gap. If the current supply shock and whale bets line up with short liquidations, the much-hyped $5K milestone could be more than just wishful thinking.
Conclusion: Ready for the squeeze
Ethereum has the setup: tightening supply, bullish whales, institutional interest, and record-breaking on-chain activity. Add in billions in short positions waiting to get squeezed, and it’s clear why traders are buzzing about $5,000.
The real question isn’t if ETH will test new highs, it’s whether the market is ready for the fireworks when it does.
