Ethereum Short Positions Hit Record High as Hedge Funds Bet Against ETH
Ethereum is experiencing an unprecedented level of short selling, with futures contracts on the Chicago Mercantile Exchange (CME) reaching a record high of 11,341, according to a new chart from ZeroHedge.
The surge in bearish bets, up over 40% in just a week and 500% since last November, signals growing pessimism about Ethereum’s short-term outlook.
In a recent analysis, The Kobeissi Letter showed that there is a historical pattern between large short positions and sharp price declines.
Ethereum Price Loses 37% Following Trump’s Tariff Orders
On Feb. 2, Ethereum suffered a steep drop of 37% within 60 hours following former President Donald Trump’s tariff announcement.
The analyst compared the event to the infamous 2010 stock market flash crash, noting that over $1 trillion was wiped out from the broader crypto market during the selloff.
We saw the effects of this extreme positioning on February 2nd.
Ethereum fell -37% in 60 hours as the trade war headlines emerged.
It felt almost like the flash crash seen in stocks in 2010, but with no headlines.
More than $1 trillion was erased in crypto in HOURS. pic.twitter.com/FuraE9ocoW
— The Kobeissi Letter (@KobeissiLetter) February 9, 2025
Despite this bearish sentiment, Ethereum briefly saw support from the Trump administration, with Eric Trump recently stating that it was a “great time to add ETH.”
However, this optimism failed to reverse the negative trend, as Ethereum remains under pressure.
As of now, ETH is trading around $2,650, largely flat over the past 24 hours and roughly 45% below its all-time high from November 2021.
In contrast, Bitcoin has significantly outperformed Ethereum in 2024, soaring over 100%, while ETH has managed only a 3.5% gain.
This disparity has widened Bitcoin’s market capitalization to six times Ethereum’s, a level not seen since 2020.
Ethereum’s struggles amid a recovering crypto market raise concerns over its fundamentals, regulatory uncertainty, and macroeconomic conditions.
While the record short positions could lead to further downside, they also increase the chances of a short squeeze if positive developments emerge, potentially triggering a sharp rebound.
“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?”
Ether Withdrawals from Derivatives Exchanges Hit Highest Level Since August 2023
As reported, the amount of Ether withdrawn from crypto derivatives exchanges has surged to its highest level since August 2023, a development analysts interpret as a bullish sign for ETH’s price.
On February 6, Ether’s net outflows from derivatives exchanges reached 300,000 ETH, valued at approximately $817.2 million, with ETH trading at $2,724 at the time.
The movement suggests reduced selling pressure as traders close leveraged positions and move assets to cold storage.
Last month, Ethereum co-founder Vitalik Buterin announced significant leadership changes at the Ethereum Foundation, aiming to prioritize technical expertise and strengthen collaboration with developers in the ecosystem.
The announcement, made on January 18 via an X post, outlined a vision to support decentralized application developers while upholding Ethereum’s core principles of decentralization, censorship resistance, and privacy.
Buterin emphasized that the Ethereum Foundation will avoid political lobbying or ideological shifts, maintaining its decentralized ethos.
The leadership shift follows a challenging year in 2024, during which the Foundation faced criticism over its spending practices, roadmap execution, and personnel policies.
Source: cryptonews.com
