Ethereum ETH/USD witnessed an unprecedented jump in bearish bets by Wall Street hedge funds, limiting the second-largest cryptocurrency’s upside potential.
What Happened: In an X post on Sunday, capital markets commentator The Kobeissi Letter highlighted that short positioning in Ethereum has surged by 40% in just one week and by a staggering 500% since Nov. 2024.
“Never in history have Wall Street hedge funds been so short of Ethereum, and it’s not even close,” The Kobeissi Letter stated.
The “extreme positioning” has led to Ethereum significantly underperforming Bitcoin BTC/USD, the analysis concluded.
Indeed, Bitcoin surged over 107% in the last year, while Ethereum grew by a paltry 6%. Additionally, Bitcoin’s market valuation was six times more than that of Ethereum as of this writing
The Kobeissi Letter attributed market manipulation, harmless cryptocurrency hedges, and a bearish outlook on Ethereum as some of the factors behind the surge in short positioning.
It warned that such positioning could cause dramatic crashes, like the one witnessed last week amid trade war fears, to be more common.
See Also: Man Whose $775 Million Bitcoin Fortune Lies Buried In A Landfill Now Wants To Buy The Trash Heap
Why It Matters: Interestingly, even as short exposure increased, inflows into Ethereum exchange-traded funds remained strong. Weekly net inflows stood over $420 million in the last week, more than double that of Bitcoin, according to SoSo Value.
Analysts at JPMorgan noted in a recent report that increased competition from rival blockchains like Solana SOL/USD and other Layer-2 networks has been eroding Ethereum’s market share and threatening its long-term prospects.
Price Action: At the time of writing, Ethereum was exchanging hands at $2,644.83, down 0.63% in the last 24 hours, according to data from Benzinga Pro.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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