Wall Street’s Ethereum Shorts Explode: Should Investors Worry?
In a dramatic shift, hedge funds seem to raise Ethereum’s short lineup at an unprecedented pace, raising questions about whether the second largest cryptocurrency in the market capitalization could face troubled waters, or whether something else is working .
According to a prominent analyst at Kobeissi Letter (@KobeissileTter), short positions in Ethereum “now increased +40% in a week and +500% since November 2024.” Their findings shared On X, it is believed that “there has never been a history of Wall Street hedge funds so lacking Ethereum, and they are not even close.”
A large number of short squeezes on Ethereum are coming?
Kobeissi Letter’s thread highlights the extreme differences between Ethereum’s price action and futures positioning between hedge funds. They pointed to a particularly turbulent period on February 2, with the emergence of trade war headlines, Ethereum dropped 37% in just 60 hours, eliminating more than “from the cryptocurrency market” in just a few hours as trade war headlines emerged One trillion dollars.
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Analysts noted how ETH inflows are going strong in the December 2024 situation, even hedge funds have facilitated brief contacts. According to Kobeissi’s letter, “In just three weeks, ETH saw a new fund of +2 billion USD, with a weekly loss of +854 million USD. However, hedge funds are betting on a surge in ETH and limit breakthrough.”
They also highlighted the peak of Ethereum trading volume, especially on January 21 (inauguration day) and the February 3 crash. Despite historically high inflow rates, Ethereum’s price “has not been able to recover even if a week has passed” and the current transaction “has been about 45% lower in record highs in November 2021.”
One of the biggest unknowns is why hedge funds are so dedicated to short-circuiting ETH. “The potential causes range from Market manipulationto be harmless crypto fences to view Ethereum itself. But, it’s like the Trump administration and New regulators prefer eth. To a large extent, Ethereum’s performance is obviously insufficient due to this extreme positioning. ”
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Kobeissi’s letter ended its subject by drawing attention to the effects of Bitcoin’s running performance and raised the question of whether a brief squeeze can be performed: Can Ethereum be set for a brief squeeze? This extreme positioning means that big fluctuations like February 3 will be more common. Since the beginning of 2024, Bitcoin has grown 12 times that of Ethereum. It’s one Short extrusion Ready to close the gap? ”
GlassNode’s Cryptovizart launches backwards
Not everyone is convinced in the crypto-analytics field that the tide wave of short positions in Ethereum marks a bearish outlook. Cryptovizart, senior researcher at GlassNode.₿ (@Cryptovizart) challenge Alerts circulated on social media: “Barchart is screaming, ‘The biggest ETH in history!’ Crypto Twitter runs like a headless chicken. Seriously, if you’re for this clickbait title Fall down, then it’s time to improve the game. Let’s keep the record.”
Cryptovizart notes in a detailed thread that the extensive shared charts on short-term positions of hedge funds may represent only a subset of the market (e.g., “leveraged funds/hedge funds/CTAs”) without regard to other important market players, such as assets. Manager, non-reportable businessman and chain holder. They added that similar “big shorts” were seen in Bitcoin futures, but during the same period, BTC outperformed ETH.
Additionally, Cryptovizart stressed that CME Ether Futures is only part of the global crypto derivatives. Liquidity on platforms such as Binance, Bybit, Okx, and on-site location and spot markets provides a broader perspective than any exchanged data suggests. “The net short of a group ≠ the net worth of the entire market. Hedge position ≠ the purely bearish bet.”
Their final note: Many positioning may be part of “non-directional strategies such as cash and expenses” that are neutral strategies used to lock in arbitrage gains, not just direct bets on ETH.
At press time, ETH was trading at $2,629.
Featured Images created with dall.e, Charts for TradingView.com
