Ethereum (ETH) Short Positioning Surges 40% in One Week, 500% Since November 2024: The Kobeissi Letter

Ethereum ETH/USD witnessed an unprecedented jump in bearish bets by Wall Street hedge funds, limiting the second-largest cryptocurrency's upside potential.

Wall Street hedge funds are betting heavily against Ethereum (CRYPTO: ETH), with short positioning surging by 40% in just one week and a whopping 500% since November 2024.

This marks an extreme level of bearishness toward the second-largest cryptocurrency, according to an analysis by capital markets commentator The Kobeissi Letter.

“Never in history have Wall Street hedge funds been so short of Ethereum, and it’s not even close,” the commentary stated.

Ethereum has significantly underperformed Bitcoin (CRYPTO: BTC) in recent months, with Bitcoin surging over 107% in the last year compared to Ethereum's 6% gain.

Bitcoin's market valuation was also six times more than Ethereum's as of Friday.

The Kobeissi Letter suggests that market manipulation, harmless cryptocurrency hedges, and a bearish outlook on Ethereum could be driving the surge in short positioning.

However, such positioning could amplify market crashes, like the one seen last week amid trade war fears, to become more frequent, the commentary warned.

Despite the increasing short exposure, inflows into Ethereum exchange-traded funds (ETFs) remained strong.

Weekly net inflows stood at over $420 million in the last week, which was more than double that of Bitcoin, according to SoSo Value.

However, total assets under management for Bitcoin ETFs were still significantly higher at $3.2 billion compared to $2.4 billion for Ethereum ETFs.

Recently, analysts at JPMorgan (NYSE:JPM) noted in a report that increased competition from rival blockchains like Solana (CRYPTO: SOL) and other Layer-2 networks was eroding Ethereum's market share and threatening its long-term prospects.