Ethereum Short Positions Surge 500% In 3 Months – What’s Behind The Bearish Sentiment?
Ethereum (ETH), the second-largest cryptocurrency by reported market cap, is facing unprecedented short selling from hedge funds. Notably, short positions in ETH have soared by 500% since November 2024, indicating heightened bearish sentiment toward the digital asset. Institutional Investors Losing Faith In Ethereum? According to a recent post on X by The Kobeissi Letter, Ethereum price is witnessing mounting challenges as short positioning in the cryptocurrency has ballooned in recent times. Notably, ETH short positions are up 40% in the last week, while they are up 500% in the last three months. Source: ZerohedgeIt is worth highlighting that this is the highest level ever that Wall Street funds have been short Ethereum. Earlier this month, the crypto market got an indication of this bearish ETH positioning, as the digital asset crashed 37% in 60 hours amid Donald Trump’s proposed trade tariffs on Canada, China, and Mexico. Interestingly, capital inflows to Ethereum exchange-traded funds (ETF) were significantly high in December 2024. In just 3 weeks, ETH ETFs attracted more than $2 billion in new funds, with a record breaking weekly inflow of $854 million. However, hedge funds’ positioning on ETH suggests that they are not very confident in the cryptocurrency’s short-term price outlook. Several factors could be at play for institutional investor’s waning interest in ETH. For instance, ETH is currently trading almost 45% below its current all-time high (ATH) of $4,878 recorded way back in November 2021. In contrast, Bitcoin (BTC) has had a stellar 2024, hitting multiple new ATH, and commanding a market cap that is almost six times larger than that of ETH. The Kobeissi Letter attributes ETH’s current lacklustre price performance to potential “market manipulation, harmless crypto hedges, to bearish outlook on Ethereum itself.” However, the market commentator indicates that this excessive bearish outlook may set ETH up for a short squeeze. They add: This extreme positioning means big swings like the one on February 3rd will be more common. Since the start of 2024, Bitcoin is up ~12 TIMES as much as Ethereum. Is a short squeeze set to close this gap? ETH Short Squeeze To Initiate Altseason? A short squeeze on ETH could teleport its price to as high as $3,000, or even $4,000. However, according to seasoned crypto analyst Ali Martinez, ETH must defend the $2,600 support level to climb higher. Recent reports indicate that ETH has likely bottomed, paving the way for a trend reversal to the upside. Another report by Steno Research suggests that ETH is likely to outperform BTC in 2025, with potential targets as high as $8,000. That said, concerns still remain about the Ethereum Foundation regularly dumping ETH. At press time, ETH trades at $2,661, up 0.1% in the past 24 hours. ETH trades at $2,661 on the daily chart | Source: ETHUSDT on TradingView.comFeatured image from Unsplash, Charts from X and TradingView.com Ash Tiwari Ash is a dedicated crypto researcher and blockchain enthusiast with a passion for diving deep into the evolving world of decentralized technologies. With a background in writing and a natural curiosity for how digital assets are shaping the future, he has immersed himself in various sectors of the cryptocurrency space, including decentralized finance (DeFi), NFTs, and liquidity mining. His journey into crypto started with a desire to fully understand the technology behind it, leading him to explore and engage with these systems firsthand. Ash’s approach to DeFi goes beyond surface-level research as he actively participates in decentralized protocols, testing their functionality to gain a deeper understanding of how they operate. From experimenting with staking mechanisms to exploring liquidity mining strategies, he is hands-on in his exploration, which allows him to provide practical, real-world insights that go far beyond theoretical knowledge. This immersive experience has helped him develop a comprehensive grasp of smart contracts, token governance, and the broader implications of decentralized platforms on the future of finance. In the NFT space, Ash’s interest is driven by the technology’s potential to reshape ownership and creativity in the digital age. He has explored various NFT projects, gaining insights into how these digital assets function within different ecosystems. His focus is on understanding the evolving relationship between creators and communities, as well as the innovative uses of blockchain technology to establish authenticity and provenance in the digital world. Ash’s research in this area often touches on the intersection of culture, technology, and community-driven projects. A key area of his expertise lies in liquidity mining, where he has engaged with various decentralized platforms to understand how liquidity provision contributes to the functionality and security of DeFi ecosystems. Ash’s hands-on involvement has allowed him to analyze the risks, rewards, and broader implications of liquidity pools, giving him a well-rounded perspective on this integral part of DeFi. His understanding of risk management and protocol design allows him to provide insights into how these systems can be navigated effectively, with an emphasis on both opportunity and caution. When it comes to communicating these complex topics, Ash’s writing is grounded in clarity and depth. He excels at breaking down intricate blockchain concepts into easily digestible information for a wide audience. Whether explaining the workings of decentralized exchanges or outlining the future potential of blockchain technology, Ash ensures that his content is accessible to both those new to the space and experienced participants looking for deeper insights. Beyond DeFi and NFTs, Ash explores a wide array of emerging blockchain applications. His research spans areas like cross-chain technologies, decentralized governance, and blockchain’s potential to integrate with traditional finance. He is continuously learning and adapting to the latest developments, ensuring that his insights are both timely and relevant. His interest extends to how these technologies are creating new possibilities for decentralization, transparency, and trust in a variety of industries. Ash’s commitment to engaging with the crypto space firsthand gives him a unique perspective that goes beyond what can be learned from research alone. His practical involvement allows him to stay ahead of the curve, offering readers and enthusiasts a clear and comprehensive understanding of the rapidly evolving world of blockchain. Whether delving into the technical mechanics of DeFi or exploring the cultural impact of NFTs, Ash’s approach is always rooted in curiosity, research, and a desire to make this technology accessible to all. Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.