Ethereum traded firmly above the $2,500 level on August 27, 2026, after finally breaking out of the $1,875-$1,950 range that had constrained its price action throughout early August. The breakout from this consolidation zone was no coincidence. On August 19, the US Treasury released a macro announcement raising its long-term bond buyback cap from $2 billion to a minimum of $4 billion per operation, scheduled to take effect on September 9.
The central bank decision triggered a chain reaction across the crypto market in the form of a historic short squeeze. Nearly $3 billion in leveraged crypto positions were forcibly liquidated within a 24-hour window. Of the total liquidations, 92% were short positions - the largest share recorded since November 2021. As thousands of traders betting on falling prices were forced to buy back assets to cover their positions, Ethereum surged approximately 18% in a short span.
Even negative sentiment from DeFi protocol exploits - such as an $8.5 million hack at Term Finance - was quickly absorbed by buying pressure without derailing the asset’s price rally.
Highest Weekly ETF Inflows of 2026
Capital inflows came not only from the unwinding of leveraged positions, but also from the institutional spot market. Spot Ethereum ETF products in the United States recorded net inflows of $697.2 million for the week ending August 21. That inflow set a new record as the strongest weekly performance in 2026. During the same period, combined inflows into US Bitcoin and Ethereum ETFs reached $2.6 billion.
On-chain market indicators immediately responded to the buying pressure. Ethereum’s Chaikin Money Flow stood at 0.24, well above the baseline zero mark, reinforcing buyer dominance. However, heavy buying during the initial stage of the rally pushed the daily Relative Strength Index (RSI) above 79, placing the asset in short-term overbought territory.
Price action now faces an ask wall. Ethereum is stalling at a key resistance zone between $2,500 and $2,545. This area aligns with Murrey Math zone calculations as well as a heavy cluster of leveraged positions, according to CoinGlass data.
A Crucial Condition Before the Weekend
Since breaking out of its previous consolidation range, Ethereum has gained more than 30% without experiencing a major pullback. The support line on the daily Supertrend indicator is helping maintain the uptrend - projected around the $2,202 mark, correcting a typo in the original source data - and the bullish recovery thesis remains valid as long as this support holds.
However, there is a time limit to sustain this momentum. Citing analysis from Daan Crypto Trades, Ethereum needs to print a new local high before the weekend arrives. If it fails to meet this deadline, the rally claimed as a breakout risks turning into a liquidity grab designed to trap buyers without further upward continuation.
Reported via crypto.news.
Read also: How Crypto Staking Works and Its Risks
Previously: Ethereum Surges 30% on $697M Inflows - But Indicator at 79 Urges Buyers to Tap Brakes
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
