Ethereum Surges Past $3,600: Is a Regime Change Here?

Ethereum's momentum continued into the weekend, with prices soaring over 20% this week, trading above $3,600 on Friday. This increase follows a series of short liquidations and bullish option bets that suggest a possible approach towards the $4,000 mark by the July 25 expiry, according to the onchain options platform Derive.xyz. Dr. Sean Dawson, head of research at Derive, noted that traders are "aggressively positioned for a rapid move to $4K," labeling the current uptick as a "regime change" for Ether. Data from Coinglass shows that approximately $136 million in ETH short positions were liquidated in just 24 hours, contributing to the price surge. Since Wednesday, about 25% of Derive's ether volume has revolved around call options in the $3,000-$4,000 range set to expire on July 25, while 8% of the platform's open interest for that date is focused on the $4,000 strike. Dawson estimates a 14% probability that Ether will close July above $4,000, which rises to 27% for prices exceeding $5,000 by the end of 2025. While Bitcoin is involved, this rally is primarily driven by Ethereum. Dawson indicated that the technical setup, option flows, and liquidations signify a notable structural shift in market positioning. Elevated crypto market conditions, buoyed by regulatory developments, supported this upward trend. The total cryptocurrency market value reached $4 trillion for the first time as bipartisan efforts pushed the GENIUS Act toward the president's desk and sent the Clarity Act to the Senate, steps investors view as catalysts for clearer crypto regulations in the U.S. Wall Street's demand for crypto funds remains "extremely strong" following these developments. Specifically, Ethereum attracted significant inflows bolstering its lead in this rally phase, according to Valentin Fournier, lead research analyst at BRN. Data from The Block indicates that Bitcoin ETFs attracted around $523 million on Thursday, slightly lower than the $602 million net inflows for Ether ETFs. However, Fournier warned of early signs indicating a potentially overheating market, suggesting that new highs could trigger widespread profit-taking. This selling pressure might lead to heightened volatility for cryptocurrencies in the near future, particularly for altcoins. Nonetheless, he anticipates that institutional flows and regulatory clarity will maintain the overall upward trend. Despite the sharp gains, the Fear & Greed Index stands at 71/100, indicating elevated but not euphoric investor sentiment. Fournier stated, "We remain overweight on altcoins, especially Ethereum and Solana, due to their exceptional performance and traction with institutional investors." Simultaneously, Bitcoin stabilizes below $120,000, having reached +1 Standard Deviation above its short-term holder cost basis, often a resistance level historically, as noted by Glassnode. Nonetheless, BTC's sideways movement remains just below its all-time high, with data suggesting the next resistance level is approximately $136,000, indicating potential for additional upside.