- Derivatives exchange Deribit shows $2,000 is the most popular bet among short sellers.
- Hedge funds have built up a record-breaking $1.4 billion short Ethereum position on the Chicago Mercantile Exchange.
- Still, institutions bought the dip last week.
What’s going on with Ethereum?
The most popular bet on derivatives exchange Deribit shows traders are betting Ethereum is heading to $2,000, with more than $130 million wagered on the price tag.
Hedge funds are also bearish. More than $1.45 billion has beenpiled into the largest short position in history on the Chicago Mercantile Exchange.
Ethereum is down 0.5% today to $2,650.
Market watchers expected Trump’s election — which has brought price appreciation across nearly every sector of the crypto market — to favour Ethereum.
But the opposite has happened. According to market research firm Kobeissi Letter, the number of Ethereum shorts on the CME skyrocketed 500% since November.
The asset has also struggled to keep up with other cryptocurrencies. The ETH/BTC ratio is at its lowest level in four years, and Ethereum still trades 50% lower than its previous $4,848 all-time high.
Yet some still see opportunity.
As short positions built up, institutions aggressively bought Ethereum ETF shares last week. CoinShares reported $790 million flowing into spot Ethereum funds as prices closed in on $2,100 — outpacing Bitcoin investments for the first time this year.
“Ethereum stole the show,” wrote James Butterfill, head of research at CoinShares, yesterday.
Arbitrage play
The divergence suggests that sophisticated traders are at play.
Some investors might be pursuing arbitrage strategies — placing bearish bets on futures while simultaneously buying ETF shares to profit from Ethereum’s price direction, regardless of which way it goes.
Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at psolimano@dlnews.com.