Ethereum has entered a phase of gauging direction near $2,000.

On May 27 (local time), blockchain outlet Cointelegraph reported that Ethereum is under bearish pressure after failing to regain the $2,150 resistance level, but the buildup of new short positions in the futures market has raised talk of a potential short squeeze.

The key is the $2,000 support level and liquidity above $2,150. Ethereum fell below $2,150 on May 17 and has not recovered that level. The zone is a resistance line that blocked upward breakouts from February to April. With the price moving sideways around $2,000, the market is watching whether, if support holds, short positions clustered above could be liquidated at once.

Futures data showed a signal different from a simple downtrend. Over the past day, Ethereum open interest rose by about 350,000 ETH, but the price is barely holding $2,000. Open interest rising as the price falls suggests declines may have been driven more by new short entries than by long liquidations.

Funding rates also stayed in positive territory. On a monthly tally, the funding rate came in at 0.0049 percent. That means some traders are paying to maintain long exposure even as prices show weakness. Both sides of the market are building positions aggressively.

In the near term, $2,000 is seen as the closest reference line. Among leveraged long positions, the liquidation risk zone topped $1 billion. Above $2,150, there is more than $1.5 billion, and by another tally $2.1 billion, in short-term short liquidity. The calculation is that if $2,000 holds, short covering could extend into that zone and produce a relief rally. Trader Ardi, through daily chart analysis, presented the current zone as a key turning point.

On-chain flows diverged by investor type. Since 2023, participation by mid-sized wallets holding 100 to 1,000 ETH has steadily declined. Holdings by this group fell to about 8.75 million ETH recently from around 16.2 million ETH at the peak in 2023. That was read as a sign that conviction has weakened among mid-tier holders with strong retail-investor characteristics.

In contrast, large investors holding 1,000 to 10,000 ETH increased their influence during Ethereum's 2024 upswing. Their holdings rose to 15.8 million ETH from 12.4 million ETH before the rally, but fell again after distribution began in October 2025, dropping to about 12.7 million ETH as of May 25. This was interpreted as a reduction in some positions after the rise.

Still, balances in ultra-large wallets holding 10,000 to 100,000 ETH rose by about 30 percent over the past year, increasing to 19.0 million ETH from 14.7 million ETH. Participation by mid-sized holders declined, but ultra-large whales continued to accumulate Ethereum.

In this situation, it is again confirmed that the short-term price direction ultimately depends on whether $2,000 holds. If support breaks, liquidation pressure on leveraged longs could grow. If it holds, large short liquidity piled up above $2,150 could turn into short-covering demand and increase volatility. The market is watching which liquidity Ethereum touches first as open interest rises, funding stays positive and whales continue accumulating.