Is a Short Squeeze Coming? Hedge Funds Push ETH to the Brink

Ethereum, the second largest cryptocurrency per market capitalization, is under significant pressure if hedge funds rise their bearish betting. Despite the broader crypto market that shows signs of recovery, Ethereum has been left behind. Since November 2024, the short positions against Ethereum have risen by 500%and have reached record heights, according to data from the Kobeissi letter. This aggressive shortcoming indicates that growing concerns about the stability of Ethereum in the short term.

Record -breaking short positions

This sudden rise in short positions created ripples in the market, with futures contracts on the CME peak at 11,341. In just one week Beerarish bets jumped more than 40%. This strong wave of negative sentiment has influenced the price of Ethereum, which currently fluctuates around $ 2,500, a decrease of 2% in the last 24 hours and almost 45% below the all times of November 2021. Hedgefonden seems to be betting on the Price of Ethereum on the price of Ethereum on Ethereum further, increasing the fear of potential market volatility.

With such extreme short positioning, Ethereum can be set for a dramatic short squeeze. This happens when short-sellers are forced to buy it back actively to cover their positions, making prices greatly higher. Given the current setup, sudden price fluctuations such as the crash of 3 February can occur more often.

Bitcoin Flipt Ethereum

Interesting is that, while Bitcoin enjoyed a rally in 2024 and won more than 100%, Ethereum saw a small rally of 3.5%. This inequality has created a gap between the two, with the market capitalization of Bitcoin that is now six times larger than that of Ethereum – levels that have not been seen since 2020. In addition, the slow performance of ETH has yielded doubts about the long -term goals compared to Bitcoin. Bitcoin is currently dominated as altcoins in general, not in a good position due to delayed regulatory policy.

Major sale and market reactions

The aggressive shortcoming coincided with a competitive drop on 2 February, when Ethereum fell 37% within 60 hours after announcements of trade policy from the Trump administration. This crash sweeped more than $ 1 trillion from the wider crypto market and made comparisons with the notorious Flashcrash of 2010 stock market. Nevertheless, Ethereum has seen strong capital inflow. In December 2024 alone, ETH attracted more than $ 2 billion, with a record -breaking weekly inflow of $ 854 million. Even support from figures such as Eric Trump, who recently called it “a great time to add ETH”, the Bearish trend has not reversed.

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A potential solution?

An X user Lola points to the high gas costs of Ethereum as a critical issue that influences Layer-2 network performance. He proposes to accept Shib, the largest native token on Ethereum, as a guest smoke to lower the costs. According to Lola, shifting the role of Ethereum can help stabilize its price during the use of Shib for transactions and to improve its long -term prospects.

For now, Ethereum is confronted with a staring competition with Bitcoin. The heavy short positions are a sign of further volatility, unless there is a positive development, ETH can continue to struggle against both market sentiment and its technical challenges.

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