Ethereum Eyes Supertrend Flip as Shorts Face $120M

Ethereum rallies as market readies for Fed decision

Ethereum (ETH) extended its recent recovery on Dec. 9, climbing to around $3,380 — the highest level since Nov. 13 and roughly 30% above November’s lows. The rebound comes as traders price in a higher probability of a Federal Reserve rate cut, and as on-chain metrics and derivatives flows show growing demand for Ether.

Short liquidations surge, fueling the bounce

Data from CoinGlass reveals that short liquidations on Ethereum topped $120 million on Tuesday, the second-largest single-day wipeout after Bitcoin’s $160 million in liquidations. Short squeezes occur when leveraged bearish positions are forcibly closed as margin calls trigger, pushing buyers back into the market and amplifying upward momentum.

Market sentiment: Fed odds and betting markets

Prediction markets such as Polymarket and Kalshi sharply increased the odds of a Fed rate cut to about 95%. Historically, expectations of looser monetary policy tend to lift risk assets, including crypto and equities, as investors chase yield and growth. That shift in macro sentiment has been a key driver behind the recent strength in ETH.

Derivatives picture: funding, open interest and accumulation

Ethereum’s funding rate has stayed positive over recent weeks, meaning long holders are paying shorts — a typical signal that market participants expect further gains. Futures open interest, which had drifted lower, now appears to have bottomed and may be recovering, suggesting fresh capital could re-enter the market and support higher prices.

Institutional buying and supply dynamics

Tom Lee’s BitMine continued to accumulate sizable amounts of ETH, purchasing over $429 million worth of the token and pushing its holdings above $11 billion. The firm has stated an ambition to own roughly 5% of circulating supply over time. At the same time, ETH balances on exchanges are at record lows, tightening available liquidity and likely amplifying price moves when buying intensifies.

Technical outlook: wedge breakout and Supertrend flip

Ethereum price chart 

Technically, Ether has broken above the upper boundary of a falling wedge — a bullish reversal pattern — and is now approaching a flip of the Supertrend indicator from red to green. The last time Supertrend flipped in mid-2025, ETH embarked on a sustained rally that eventually reached new highs. If history repeats, a confirmed Supertrend change could open the path toward the $4,000 zone.

Risks to watch

Key risks remain: an unexpected hawkish surprise from the Fed, a sharp reversal in futures funding, or a resurgence of large-scale liquidations could derail the uptrend. Traders should manage leverage carefully and monitor on-chain flows, funding rates, and exchange balances for early warning signs.

Overall, the convergence of macro optimism, heavy short squeezes, positive funding dynamics, and institutional accumulation has created a favorable environment for ETH. A confirmed Supertrend flip and rising open interest could further validate this bullish setup, but disciplined risk management remains essential in volatile crypto markets.

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