Hedge funds are ramping up short positions on Ethereum due to the slowing momentum of the world's second-largest cryptocurrency.
Rise in Short Positions on Ethereum
According to data from the Kobeissi Letter, short positions on Ethereum have surged 500% since November 2024. A recent post highlighted that such volume of short positions on Ethereum has never been seen before.
Competition Among L1 Blockchains
Ethereum faces increasing competition from other layer-1 blockchains. This may be a fundamental reason why Ether's price lags behind Bitcoin, according to James Wo, founder of DFG.
Ethereum Recovery Prospects
To improve its price action, Ethereum requires more blockchain activity. Aurelie Barthere, a researcher at Nansen, believes collaboration with private and public entities will be essential.
Rising competition and increasing short positions are putting pressure on Ethereum. Experts anticipate that increased market activity and new partnerships could help the cryptocurrency regain its footing.
