 Ethereum short positions surge 500% as hedge funds bet on decline 
2025-02-10
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Hedge funds are increasing short positions against Ether as the world’s second-largest cryptocurrency struggles to gain momentum.
Ether ETHUSD has struggled to gain momentum over the past year, rising only 5.9%, underperforming compared to Bitcoin BTCUSD, which surged 104%, according to Cointelegraph Markets Pro.
Short positions on Ethereum have risen more than 500% since the US Presidential election in November 2024, according to data shared by the Kobeissi Letter. In a Feb. 10 X post, the financial newsletter wrote:

“We saw the effects of this extreme positioning on February 2nd, Ethereum fell -37% in 60 hours as the trade war headlines emerged,” the post added.
Ethereum has underperformed Bitcoin “largely due to this extreme positioning,” which may result in a “short squeeze.” This occurs when the price of an asset makes a sharp increase, prompting short sellers to buy Ether to avoid greater losses.
Ethereum pressured by L1 altcoin “dilution,” unlike Bitcoin
While Bitcoin is recognized as the “digital gold” of the industry, Ethereum faces growing competition among other layer-1 (L1) blockchains.
This may be another fundamental reason for Ether’s underperforming Bitcoin price, according to James Wo, the founder and CEO of venture capital firm DFG.
He told Cointelegraph:
“Ethereum still has the largest ecosystem of DeFi and is home to many well established protocols such as Uniswap, Lido and Aave. When onchain activity picks up again, we can expect Ethereum's price action to improve,” Wo added.
Other experts also believe that Ethereum needs more blockchain activity to start recovering above $4,000.
To reverse its decline and move toward its previous highs, Ether will need more fundamental blockchain activity first, according to Aurelie Barthere, principal research analyst at Nansen.
“Other layer-1s are catching up with Ethereum regarding apps, use cases, fees and amount staked,” Barthere told Cointelegraph.
Barthere believes Ethereum could benefit from increased collaboration with private and public sector entities, particularly in the US, given recent regulatory momentum in favor of blockchain and crypto.