Can A Short Squeeze Send Ethereum To $3,000? Analysts Discuss Where ETH May Be Headed

As a result of the recent pullback in the cryptocurrency market over the weekend, Ethereum (ETH) has created two Chicago Mercantile Exchange (CME) gaps at $3,000 and $2,600. Crypto analyst Ted suggests that a short squeeze could soon push the price beyond $3,000, potentially filling these two CME gaps.

Is An Ethereum Short Squeeze Imminent?

Over the past two weeks, Ethereum has lost $70 billion in its total market capitalization, leaving it with a market cap of $268 billion at the time of writing. According to data from the Binance crypto exchange, ETH reached a low of $1,993 on March 4.

Although Ethereum is currently trading in the low $2,000 range, analysts believe that a short squeeze could benefit ETH bulls. Ted took to X to share his analysis on ETH’s current price action.

The analyst pointed out that ETH has two significant CME gaps to fill in the short term: one at $3,000 and the other at $2,600. Ted also noted that since Q1 2024, ETH has filled all CME gaps, so it wouldn’t be surprising to see these gaps filled soon.

Excessive bearish sentiment surrounding ETH could be the catalyst that triggers a massive short squeeze. The analyst explained:

I think we could soon see a massive short squeeze, which will fill the first CME GAP. After that, there could be some consolidation before ETH heads higher.

For the uninformed, a CME gap refers to the price difference that occurs on Ethereum futures contracts traded on the CME when the market closes for the weekend and reopens at a different price. Traders often watch these gaps, as ETH historically tends to “fill” them by revisiting the price level where the gap occurred.

Similarly, a short squeeze occurs when traders who have bet against an asset are forced to buy back their positions as the price rapidly rises due to unexpected bullish momentum. This surge in buying pressure can further drive up the asset’s price, forcing liquidations and potentially even higher prices.

Multiple Bullish Signs For ETH, But Sentiment Needs To Improve

Fellow crypto trader Merlijn The Trader’s analysis appears to align with Ted’s. The trader noted that the ETH Relative Strength Index (RSI) is at a “critical level,” highlighting that every time the digital asset has entered this zone, a significant move followed.

Other positive signs, such as a bullish divergence, also seem to suggest a potential upward move for Ethereum. However, it would be prudent to wait for similar bullish indicators to develop on longer timeframes before entering the market.

While these indicators may point toward a potential rally in ETH, the overall sentiment surrounding the digital currency continues to be in the doldrums. At press time, ETH is trading at $2,221, up 1.4% in the past 24 hours.