TLDR
- The volume of short positions on Ethereum has exploded, having shot up 500% since November 2024 and jumped 40% just in the last week, skyrocketing to an unprecedented 11,341 futures contracts on the CME.
- Trading in the $2,500-$2,600 range, Ethereum's price has slid nearly 45% from its peak in 2021. It trails well behind Bitcoin, which has shown a notable 100% climb in 2024.
- On February 2nd, Ethereum suffered a sharp 37% plunge within a mere 60 hours, shortly after President Trump unveiled new tariffs.
- In a twist to the overall bearish outlook, spot Ethereum ETFs outperformed Bitcoin ETFs last week, pulling in net inflows of $420 million compared to Bitcoin's $204 million.
- A ripple through the market was felt as the Ethereum Foundation shifted 50,000 ETH, with its selling behavior casting a shadow over market sentiment.
Ethereum, holding the rank of the second-largest crypto by market value, is under pressure from hedge funds escalating their short bets to levels never seen before. Insight from CME futures highlights a hike in short bets, reaching a peak with 11,341 contracts now active. That's a stark 500% increase since November 2024, with a 40% jump occurring in just one recent week.
The price of ETH currently hovers around $2,500 Ethereum has fallen 45% from its record high in November 2021. This performance contrasts sharply with Bitcoin, which has more than doubled since the beginning of 2024, widening the gap to six times Ethereum's market cap—a dominance last seen in 2020.
A rapid descent of 37% for Ethereum spanned just 60 hours on February 2nd, a move that coincided with new tariffs announced by President Trump, wiping over $1 trillion from crypto markets in that short span.
Interestingly, the rise in pessimistic positions takes place while spot ETFs are actually performing solidly; from February 3rd to 7th, Ethereum's spot ETFs raked in $420 million in net inflows, surpassing Bitcoin ETFs, which saw $204 million in the same timeframe. Ethereum Market experts have pinpointed $2,600 as a pivotal floor for ETH. This threshold could decide the short-term forecast, potentially leading to further declines or a short squeeze if conditions become favorable.
The recent activity from the Ethereum Foundation, which includes selling 50,000 ETH, has added a layer of uncertainty among investors.
Adding to market uncertainty, the Ethereum Historical trends suggest that extensive short positions often precede significant moves in Ethereum's price. The Kobeissi Letter highlights past situations where such setups led to notable market shifts.
Short bets on Ethereum have jumped 40% in just seven days and risen 500% since November 2024.
What is happening with Ethereum?
Wall Street hedge funds have never been this bearish on Ethereum, with the gap being noticeably wide.
— The Kobeissi Letter (@KobeissiLetter)
What do hedge funds know is coming?
(a thread) pic.twitter.com/knsyOhYyyt
While hedge funds remain skeptic, institutional interest portrays a mixed picture. December 2024 saw over $2 billion flowing into ETH, along with a record weekly inflow of $854 million. February 9, 2025
Throughout this turbulent phase, trading volumes have shown resilience, with prominent spikes noted on January 21st, coincidentally coinciding with Inauguration Day, and again during February 3rd's market debacle. However, ETH's price still hasn't bounced back from the recent drop.
Ethereum's gas fees have plunged 90%, which might suggest either reduced activity on the network or improved operational efficiency, factors that could affect future valuation and network use.
Some observers are drawing parallels between the present market scene and past cycles. Crypto analyst Ted Pillows has likened current conditions to March 2020, a period marked by Ethereum's capitulation and subsequent bounce-back.
Coinglass reports reveal recent liquidation data, showing 24-hour liquidations hitting $44.65 million, with $30 million from long positions being dissolved, highlighting continued market turbulence.
In the broader crypto landscape, Ethereum's performance deviates from other significant cryptocurrencies. While Bitcoin and numerous altcoins have reported gains, ETH's modest 3.5% rise since the start of 2024 illustrates its substantial lag.
Eric Trump's recent remark that 'it's a great time to add ETH' was only a temporary buoy for the price, emphasizing the market's heightened responsiveness to news and public figures' statements.
Current market statistics indicate that ETH is trading at $2,636, boasting a market cap of $317 billion and an upswing in daily trading volumes by 20%, reaching $19.5 billion.
Maisie is a seasoned journalist reporting on Crypto & Financial news, contributing to sites like Moneycheck.com, level-up-casino-app.com, Computing.net, and serving as Editor in Chief at Blockfresh.com.
