Ethereum surges above $2,250 as powerful crypto short squeeze wipes out billions in bearish bets and fuels broad digital asset rally
Updated: Sep 7
Ethereum staged one of its strongest rallies of 2026 on Thursday, surging above $2,250 as a powerful short squeeze swept through cryptocurrency markets and improving liquidity conditions encouraged investors back into risk assets. Ethereum climbed approximately 18% within 24 hours, taking its weekly gain to around 20% and outperforming Bitcoin, which also rallied sharply. The advance was part of a broader crypto rebound that pushed Solana, XRP and other major digital assets higher.
Importantly, reports that more than $1 billion of Ethereum shorts alone were liquidated should be treated cautiously. Verified market reporting shows approximately $1.4 billion of crypto short positions across the wider market were wiped out within four hours during the initial rally, rather than confirming that the entire amount represented Ether positions.
The scale of the squeeze was illustrated by one trader on decentralised exchange Hyperliquid, whose 50,000 ETH short position was forcibly liquidated in just 12 seconds. The position, worth around $106 million at liquidation prices, generated a loss approaching $24 million.
The wider rally accelerated after US Treasury Secretary Scott Bessent increased the size of Treasury bond-buyback operations, a development traders interpreted as supportive of financial-market liquidity.
Political developments added further momentum. President Donald Trump called on Congress to advance stalled cryptocurrency market-structure legislation, describing the objective as securing a fair version of the Digital Asset Market Clarity Act. Ethereum's sharp move nevertheless leaves traders facing an important technical test. CoinDesk cautioned investors to watch whether ether holds above $2,200, noting that rapid rallies driven primarily by liquidity conditions rather than Ethereum-specific developments can surrender some gains.
For now, Ethereum's breakout highlights how rapidly improving liquidity and forced short-covering can transform sentiment across highly leveraged cryptocurrency markets.