Ethereum, the second-largest cryptocurrency, rose as much as 8.3% on Friday, marking its biggest move in three weeks as traders betting against Ether faced more than $255 million in liquidations over a 24-hour period.

Short positions in Bitcoin recorded $172 million in losses during the same period. Bitcoin typically accounts for the larger share of leveraged liquidations, but Ether led the market this time. The rally unfolded as U.S. markets fluctuated following the release of economic data and a decline in oil prices.

The move resembled the market action in late August, when a sharp rise in Bitcoin triggered the largest short-liquidation wave recorded since 2021. On Friday, Ether drove a similar move. Its price rose so quickly that trading activity appeared to reflect traders chasing the rally more than a broad accumulation of spot positions.

Many traders had remained on the sidelines since August. Following the previous major leverage flush, there had been little fresh news to bring them back into the market. That distinction between forced short covering and broader spot-market demand leaves subsequent trading activity important for assessing whether the move extends beyond the liquidation event.

Ether liquidations accelerate as short sellers pay to maintain positions

According to Coinglass, approximately $188 million in Ether positions were liquidated within one hour as the price continued to rise.

Across the cryptocurrency market, nearly $500 million in long and short positions disappeared over the past day. That was one of the largest totals since Bitcoin’s record short liquidation event the previous month.

Binance recorded approximately $76 million in Ether liquidations over 24 hours. McCarthy said most of the liquidated positions were shorts that had to be closed.

Ether perpetual futures were also showing negative funding rates. These contracts are widely used for leveraged cryptocurrency trading. When funding rates are below zero, traders holding short Ether positions pay to maintain them, while traders on the other side receive those payments. With Ether moving higher, short sellers have less room to continue waiting for a reversal.

Bitcoin has also been rising. Its price has gained approximately 20% over the past month, returning above $80,000. However, Bitcoin remains down nearly 10% in 2026. It also climbed above $81,000 in late August before giving up some of those gains.

The rebound followed the cryptocurrency market’s recovery from the Aug. 19 liquidation event, one of the largest leverage-related disruptions the market has experienced in recent years. That event was still small compared with Oct. 10, 2025, when approximately $19 billion in leveraged cryptocurrency positions were liquidated in a single day.

Bitcoin exchange-traded fund flows have also strengthened. The iShares Bitcoin Trust (NASDAQ: IBIT) recorded approximately $3.5 billion in net inflows over the past month, leaving the fund close to even for the year after earlier outflows.

Bitcoin remains linked to technology stocks and congressional developments

Bitcoin also continues to lack clear differentiation from technology stocks. Correlation data indicates that Bitcoin remains linked to risk appetite associated with technology equities. When investors become more cautious, they may reduce risky positions, potentially including Bitcoin.

Developments in Washington are another factor. The U.S. Senate is expected to hold an important procedural vote next week on the Clarity Act, legislation intended to establish federal rules for digital assets. Lawmakers have spent most of the year attempting to advance the bill through Congress, but it has not yet passed.

Coinbase Global (NASDAQ: COIN) CEO Brian Armstrong told CNBC’s “Squawk Box Asia” this week that he expects the bill to pass after cryptocurrency companies, law-enforcement groups and several banks reached common ground.

Armstrong also said the industry would have another path forward if Congress does not approve the legislation.

“Frankly, if it doesn’t pass, it’s also going to be a good outcome because the SEC and the CFTC have said that they’re ready to publish rulemaking, and we’re going to get regulatory clarity one way or another on the 15th or the day or two after,” he said.

Prediction markets are less certain. Traders there do not view the bill’s passage as assured after Congress spent the year attempting, without success, to pass major cryptocurrency legislation.