Ethereum faces unprecedented short positioning as short interest spikes 500% since November 2024

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ETHEREUM: The Short Squeeze is Coming 🚨

Ethereum faces unprecedented short positioning as short interest spikes 500% since November 2024

Oh, honey, Ethereum is in a bit of a pickle 🤪. Short interest has skyrocketed by 500% since November 2024, and I’m not talking about a gentle little flutter, I’m talking about a full-blown, can’t-even-breathe, short-squeeze- incoming 🚨.

In the past week alone, short interest in Ethereum has surged by a whopping 40%, because, why not, right? 🤷‍♀️ According to The Kobeissi Letter, an industry leading commentary on the global capital markets (because, of course, they’re the experts 💁‍♀️), this is the highest short positioning Ethereum has ever seen.

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)

— The Kobeissi Letter (@KobeissiLetter) February 9, 2025

For years, Ethereum has been under scrutiny, particularly around the fear that it could be classified as a security by the SEC. But, bless the Trump administration’s heart, they’ve come to the rescue, and experts believe that this is now unlikely. In fact, Eric Trump recently posted on X that “it’s a great time to add ETH,” causing a brief surge in Ethereum’s price. But, honey, don’t get too excited, because despite this shift in regulatory tone, Ethereum is still facing the highest short positioning it has ever seen.

Feels like a great time to enter #BTC! 🚀 @worldlibertyfi

— Eric Trump (@EricTrump) February 6, 2025

The analysts at The Kobeissi Letter point to a particularly volatile period around Feb. 2, when Ethereum dropped by 37% in just 60 hours on the trade war headlines. They also highlight strong inflows into ETH during Dec. 2024, despite reports that hedge funds were increasing their short positions. In just three weeks, ETH saw over $2 billion in new funds, including a record-breaking weekly inflow of $854 million. 

Additionally, they noted significant spikes in Ethereum trading volume, particularly on Jan. 21 (Inauguration Day) and during the Feb. 3 crash. Despite the high inflows, Ethereum’s price has struggled to recover, remaining about 45% below its ATH set in Nov. 2021, even after a week has passed.

What do hedge funds know is coming?

With all of this taken into consideration, The Kobeissi Letter analysts wonder, “What do hedge funds know is coming?” They speculate on possible explanations, ranging from market manipulation and routine crypto hedging strategies to a simple-and-plain bearish outlook on Ethereum’s future. “However, this is rather strange as the Trump Administration and new regulators have favored ETH,” they wrote in the X post.

To wrap it up, The Kobeissi Letter analysts suggest that the extreme positioning in Ethereum’s market is likely to lead to more significant price swings, similar to the one seen on Feb. 3. Furthermore, they question whether a short squeeze could help close the performance gap between Bitcoin and Ethereum. To put it into perspective, since the beginning of 2024, Bitcoin has outperformed Ethereum by about 12 times. Moreover, Ethereum’s market cap has shrunk in comparison to Bitcoin, which is now six times larger than ETH. This is the largest disparity between the two assets since 2020.

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2025-02-10 16:03