Ethereum suffered further losses as hedge funds increased short positions on the cryptocurrency to the highest levels on the Chicago Mercantile Exchange (CME).
Despite signs of capital flowing into spot Ethereum exchange traded funds (ETFs), this is still an aggressive shorting of asset that is currently on a trajectory over the near term. In the past week, U.S. spot ETH ETFs have seen net inflows of $420.06 million vs. $204 million for the U.S. spot Bitcoin ETFs, almost doubling.
However, the price of ETH has since fallen further down its downward trend rather than owing to the influx of capital. Data shows that Ethereum previously fell by around 20% in the preceding month and is now trading at $2,657 at press time.
Ethereum Lags Behind Bitcoin as Bearish Pressure Mounts
The linkage between ETHs troubles in the market and the spike in hedge fund short positions is serious and right now, market analysts are making a big deal about it.
While it’s the 500% increase from November 2024, short positions on ETH have burst more than 40% over the past week. Speculation has also been driven due to this trend that institutional shorting could indeed be exacerbating Ethereum’s ongoing price weakness.
Its performance gap relative to Bitcoin also widened because of the growing bearish pressure on ETH. Since the arrival of 2024, Bitcoin has beaten the growth of Ethereum by a ratio of 12:1, with BTC’s market capitalization standing at six times that of ETH, a dominance level not seen since 2020.
What is happening with Ethereum?
Short positioning in Ethereum is now up +40% in ONE WEEK and +500% since November 2024.
Never in history have Wall Street hedge funds been so short of Ethereum, and it’s not even close.
What do hedge funds know is coming?
(a thread) pic.twitter.com/knsyOhYyyt
— The Kobeissi Letter (@KobeissiLetter) February 9, 2025
As Ethereum continues in its downward momentum, traders and analysts are waiting to see if the sustained selling will cause ETH to reach new lows or spark a short squeeze should Ethereum’s market unexpectantly reverse course. However, ETH is still being attacked by hedge funds that bet against the recovery for the time being.
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