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Analysis: The main force behind this round of Ethereum short selling is suspected to be a hedge fund
BlockBeats News, August 20th, Ethereum recently surged to nearly $5,000, triggering a bullish rally. However, this key level was not broken through, as sellers once again took control and pushed the price back down. A significant portion of the downward pressure appears to come from large hedge funds, which continue to heavily short the second-largest cryptocurrency.
When the Ethereum price surpassed $4,000, the number of short positions also increased, with many expecting the upward momentum to weaken. A large number of shorts were led by major hedge funds, further intensifying Ethereum's downward pressure. This is not the first time, as hedge funds have been attempting to suppress the ETH price to reduce their own losses.
According to The Block's "CME Ether Futures Net Position" dashboard, these short positions have risen to a historic high. Only hedge funds saw their short positions nearly double in August. The data shows that on August 5th, hedge fund-dominated Ethereum shorts were $2.3 billion. However, in the latest report, that number quickly surged to $4.19 billion, indicating hedge funds are still betting on a drop in ETH price.
In contrast to hedge funds, asset management firms remain relatively optimistic about Ethereum. The data shows that they continue to hold over $1.22 billion in long positions. While this is a substantial amount, it is still lower than the short positions, indicating that shorts still dominate. Undisclosed positions remain bullish at $77.5 million. Meanwhile, investors classified as "Others" (usually including retail investors) hold $397.5 million in short positions, adding further downward pressure to the market.
For hedge funds, an increase in ETH price means losses, while a decrease means profits. However, with short positions at historical highs, historical trends suggest that such periods often lead to a short squeeze, potentially triggering a new round of price surge.
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