• Ethereum futures on the CME hit a record high of 11,341 contracts, signaling a 500% surge in bearish bets since November 2024.
• Short positions on ETH have risen 40% in the past week, raising concerns of a potential price crash akin to previous market downturns.
• Ethereum trades at $2,500, down 45% from its all-time high, while Bitcoin outperforms with a 100% surge since early 2024.

Ethereum, the world’s second-biggest cryptocurrency by market capitalization, is feeling the heat as hedge funds increase short selling to a record high. Figures from ZeroHedge indicate that futures contracts on the Chicago Mercantile Exchange (CME) have hit a new record of 11,341, representing a huge bearish wager against the digital asset.

The Kobeissi Letter’s newest analysis highlights a staggering 40% increase in short positions over the last week alone, with a whopping 500% spike since November 2024. The aggressive positioning has stirred fears of Ethereum’s near-term outlook, with analysts likening it to past market declines.

According to The Kobeissi Letter, Ethereum’s history demonstrates a clear trend: big short positions tend to precede massive price drops. A prime example occurred on February 2, 2024, when ETH plummeted by 37% within 60 hours. The drop, triggered by President Trump’s tariff announcement, erased over $1 trillion from the broader crypto market within hours.

“It resembled the 2010 flash crash in stocks, but without any clear headlines,” noted a Kobeissi Letter analyst, emphasizing the rapid and chaotic nature of the selloff.

Despite the rising bearishness, Ethereum received a surprise vote of confidence from Eric Trump, who recently said it is “a great time to add ETH.” The endorsement lifted the ETH price, but the spike was brief since bearish momentum was still in charge.

According to Coinmaketcap data, Ethereum is currently at approximately $2,600, 1.20% down in the past 24 hours and 45% below its all-time high in November 2021. Bitcoin, meanwhile, has left ETH in the dust, having rallied over 100% since the start of 2024 compared to Ethereum’s meager 3.5% gain. The disparity has stretched Bitcoin’s market capitalization to six times that of ETH—a dominance not seen since 2020.

Ethereum’s poor performance during an otherwise recovering crypto market has investors questioning the underlying reasons. Analysts point to a confluence of factors, from regulatory uncertainty and doubt about Ethereum’s technological roadmap to broader macroeconomic headwinds.

The record-high short positions in ETH heighten the risk of heightened price volatility. If bearish bets are right, ETH could fall further, validating the negative outlook. However, the sheer size of such positions also raises the likelihood of a short squeeze—a steep price rally triggered by short-sellers scrambling to cover their positions—if unexpected positive developments occur.

Ethereum’s near-term future remains uncertain. The increasing divergence between BTC and ETH underscores the latter’s challenge in regaining investors’ trust. ETH’s ability to break out of its bearish trend depends on technological progress, regulatory clarity, and macro stability.

For now, all eyes are fixed on the futures market, where the record high in short positions could either spell doom or pave the way for a dramatic comeback. With traders bracing for a potential rollercoaster ride, Ethereum’s story is a sobering reminder of the volatile nature of the cryptocurrency market.

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