To add a little bit of perspective, the Ethereum price has surged nearly 20X in just two weeks. While everybody else is yelling “bull run!” and wishing for lambos, hold up, before you refinance your house to purchase ETH. What I’m witnessing is a short squeeze driven by speculation, and those never end well.

Short Squeeze: A House of Cards?

Here's the deal. Though Ethereum recently soared from under $2,111 to $2,515, the narrative? A glorious march to $3,000 and beyond! If you scratch the surface, you’ll find some really interesting things. There are some pretty clear fingerprints all over this rally of a classic short squeeze. Speculators shorting ETH were forced to rapidly buy back their position as ETH’s price sharply increased. This compelled purchasing created a flywheel effect, rapidly accelerating the price! It’s sort of a game of musical chairs. When the music stops, somebody is left holding the bag.

The $2,500 level proved to be the biggest pinch point of all. This isn’t to say this is organic, long-term belief in Ethereum’s value; far from it as this is a reaction to pure market mechanics.

Remember the Beanie Baby craze? Or the dot-com bubble? Sound judgment often goes out the window when hype and the promise of short-term gains blind investors to the realities underneath. Positive funding rates? Of course, speculators are queuing up to open heavily margined longs, betting on further price appreciation. That’s just pouring more gasoline on the fire, making a tinderbox of overloaded positions ripe for liquidation. The greater the funding rate, the larger the possible drop.

Exchange Flows Tell a Different Story

Though the price action is stealing the show, monitor the exchange inflows. There’s a ton of data today indicating a large amount of ETH going to the top exchanges. What does that tell you? Potentially, the whales have decided that it’s a good time to take profit/reposition their holdings. They are not here for the long-term. If those whales begin selling, this short squeeze could turn on a dime.

It’s the proverbial theater on fire, where as soon as someone shouts “fire” everyone heads for the door all at once.

If we’re being completely honest, the market is all about the narratives. Right now, the narrative is bullish. But narratives change fast. One bad headline, one regulatory overreach, one critical exploit and the whole thing is blown up.

Don't Get Caught Holding the Bag

Technical analysis? Sure enough, some are already looking at a breakout above $2,800—and the prospect of a “golden cross” formation. Some are even thinking we’ll retrace back towards the $1,700-$1,950 zone. Who's right? Honestly, nobody knows. That's the point. Technical analysis is a powerful tool, but it isn’t a crystal ball. In a space as unpredictable as crypto, sometimes it’s less about understanding technical analysis and more about understanding the crowd psychology.

I get it, I get it, nobody wants to leave money on the table. The lure of easy money is powerful. But ask yourself this: are you investing based on genuine conviction in Ethereum's technology and long-term potential, or are you simply chasing the green candles?

This market is driven by speculative activity. So, what's my take? Be extremely cautious. Don't FOMO into this rally. Tracking funding rates and exchange inflow/outflow data. And finally, remember the most important rule of all—never invest money you can’t afford to lose. Because despite all the upside potential making a short squeeze look so sexy, the short squeeze downside risk is vicious.