The Ethereum price prediction 2025 narrative is heating up again, as the second-largest cryptocurrency faces intense short positioning. On-chain analysts suggest that this short selling is increasing market fear. This pattern is obvious because it creates upside opportunities as the market does the opposite of what bearish expectations would suggest.
This is historically evident in the financing rate chart. Similar setups in the past have preceded significant ETH price rebounds. The price of Ethereum today is hovering around $3,850. On-chain and technical data suggest a growing bullish divergence. This divergence could fuel an explosive recovery.
Short Squeeze Setup: Funding Rates Indicate Panic Among Traders
Over the past two months, according to data from Santiment Insights, the funding rate has become a critical indicator for predicting the next direction of the Ethereum to USD price on exchanges.
Historically, when the market leans too far toward long positions, corrections follow. Conversely, when short selling dominates, prices often rebound. This seems to be happening lately.
Currently, Ethereum is seeing an increase in short positions on major exchanges, signaling that traders are betting on a further decline.
However, such periods of extreme bearish sentiment often mark the end of corrections and the beginning of rallies. The Ethereum price chart shows the ETH price consolidating near $3,850 after a pullback from recent highs, while funding rates indicate an increasing likelihood of near-term liquidations, which could be a classic precursor to a relief rally.
This setup has positioned the Ethereum crypto for what some are calling a “historic rebound signal,” as exchanges remain poised to liquidate excessive bearish bets, potentially triggering a rapid rally.
On-Chain Divergence: Stakeholders Show Strength Amid Market Volatility
On-chain data from analyst CryptoQuant further reinforces the bullish outlook for Ethereum price prediction for 2025. According to recent measurements, a divergence has emerged in the market value to realized value (MVRV) ratio between staked ETH and circulating ETH.
According to analyst research conducted this week, the MVRV for the circulating supply was 1.5, while the ETH staked was a bit higher at 1.7, indicating approximately 20% higher unrealized gains for stake holders. This reflects the stronger conviction of validators, who are less likely to sell and more likely to hold on to their securities despite volatility.
The analyst mentions that currently, 36.1 million ETH is staked out of 121.12 million ETH in circulation. This constant increase in the coins involved underlines the maturation of the network’s foundations. Meanwhile, Ethereum’s combustion mechanism continues to offset inflation, balancing supply and demand dynamics.
This gap in MVRV highlights a “healthy” market structure, as long-term players ensure the stability of the ecosystem, while liquid ETH maintains moderate profit zones that prevent speculative overheating.
Technical outlook: Key support could fuel rally towards $5,600
From a technical perspective, Ethereum price predictions suggest ETH is testing a crucial weekly support zone that could serve as a springboard for a year-end rally.
If this level holds, the next potential upside target is around $5,600, which aligns with both structural resistance and historical rebound patterns.
If this happens, the nearest target seems most likely to be reached before the end of the year, which also coincides with the upper limit of an ascending parallel channel.
The growing divergence between short-term fear and long-term conviction paints a compelling picture for the months to come.
If market sentiment changes and short positions begin to unwind, the Ethereum USD price could experience an accelerated breakout to higher ranges as liquidity returns.
In summary, the current mix of short positioning, on-chain stability, and technical resilience creates a favorable environment for Ethereum’s next major move, reinforcing optimism in the 2025 Ethereum price prediction outlook.
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