Follow the public account: Lazy King Squirrel
The short position in Ethereum has surged to over 40% in the past week, reaching the largest short position in the history of this Altcoin. This is because the ETH price has faced strong selling pressure in recent weeks, and the short traders have shown no remorse. Analysts are weighing whether ETH is likely to fall further or if a short squeeze is forming.
The Ethereum short position paints a grim picture
In the past week, the short position in Ethereum has surged by 40%, increasing by a staggering 500% since November 2024. Historically, this is the largest bearish bet by Wall Street hedge funds on the world's largest Altcoin, as trader sentiment has turned extremely negative.
To learn more about the crypto world and get the latest news, feel free to add me to the group; QQ: 3786051908 or follow the public account: Lazy King Squirrel, we have the most professional community, releasing daily market analysis and recommending high-potential altcoins.
Earlier this month, on February 2nd, Ethereum also experienced similar extreme positioning, with the ETH price dropping 37% in three days due to concerns over the Trump trade war. Additionally, the overall trading volume of this Altcoin has been strong. On January 21st, coinciding with the inauguration, and on February 3rd during the market crash, ETH prices saw significant increases. Despite the strong trading volume, even after a week of decline, the price of ETH has not recovered from the drop.
Will ETH price see significant volatility? The fate hangs in the balance
This extreme positioning in Ethereum suggests that the price of Ethereum may experience violent fluctuations in the future. The recent performance of Ethereum has lagged far behind the overall crypto market, while other Altcoins have set new highs.
Crypto analyst Ali Martinez believes that $2,600 is a critical support level for (ETH). Martinez stated in a recent article that if this level holds, Ethereum may accumulate enough momentum to achieve a significant rebound, potentially pushing the price towards $3,000 or even $4,000. Traders and investors are closely monitoring ETH's performance at this crucial threshold.
As of the time of writing, the price of Ethereum has fallen 1% to $2,636, with a market capitalization of $317 billion and a daily trading volume surging 20% to $19.5 billion. According to Coinglass data, the 24-hour liquidation amount has soared to $44.65 million, with $30 million being long liquidations. Additionally, the Ethereum Foundation's large transfer of 50,000 ETH has made investors cautious, as the foundation has been selling Altcoins in the past few months.
Crypto analyst Ted Pillows compared Ethereum's recent price action to the market conditions in March 2020. He pointed out that ETH also experienced a similar decline, triggering a long-term breakout in Altcoins.
"At the time, many thought Ethereum was done for, but it staged a major comeback," he noted. Pillows remains optimistic, expecting Ethereum to reach $10,000 in this cycle, calling it a "programmatic" milestone. Furthermore, the 90% reduction in ETH gas fees may also drive future rebounds.
Institutional demand remains strong
Despite the strong short positions, Ethereum saw a significant inflow of funds in December 2024, indicating strong investor interest. Within three weeks, ETH attracted over $2 billion in new capital, including a record-breaking $854 million in weekly inflows.
Furthermore, last week, the inflows into Ethereum spot ETFs exceeded those of the US Bitcoin spot ETFs. From February 3rd to February 7th (Eastern Time), the Bitcoin spot ETF had a net inflow of $204 million, while the Ethereum spot ETF had a net inflow of $420 million, surpassing Bitcoin.
