Ethereum's Largest Short: Trillion-Dollar Institutions With Zero Holdings

Written by Fernando Pertini

Translated by Saoirse, Foresight News

Wall Street has already begun building within the Ethereum ecosystem, yet the vast majority of investment portfolios still hold zero ETH.

André Kostolany once made a market observation that I deeply appreciate: "In the stock market, 2 plus 2 never equals 4; it always equals 5 minus 1. You just need a strong mindset capable of enduring this 'minus 1'."

Ethereum investors are all too familiar with this "minus 1."

Five years of consolidation and volatility, repeated broken hopes, and relentless bearish narratives claiming "Ethereum is dead." One new public chain after another emerged, promising to replace Ethereum. Fierce market swings have even made long-term investors doubt their initial choices.

This summer, the landscape shifted. I’m not referring to another wave of emotional hype within the crypto community, but rather the actual onboarding of real-world traditional financial institutions launching Ethereum-based business operations.

Robinhood launched an Ethereum Layer 2 network. In just six weeks, its total value locked surpassed $1 billion. Revolut, with over 80 million users, issued a euro stablecoin on Ethereum.

Two tokenized money market funds under Morgan Asset Management achieved a combined size exceeding $800 million on the Ethereum mainnet. Crédit Agricole issued a euro stablecoin on Ethereum and utilized it to settle subscription payments for Amundi’s tokenized money market fund. Japan saw the birth of its first trust-issued yen stablecoin built on Ethereum. Neuberger Berman also launched its first tokenized fixed-income fund on Ethereum.

Then BlackRock officially entered the fray. Not by releasing a podcast episode, nor by tossing out another cliché about how "blockchain has great potential," but by directly launching actual products. BlackRock went live with multiple tokenized Ethereum funds; followed by announcing it would partner with J.P. Morgan’s Kinexys to tokenize portions of its European institutional cash series (with $311 billion in assets under management as of June 30).

Morgan Stanley rolled out an Ethereum product featuring staking capabilities. Fidelity submitted an application to add staking functionality to its own Ethereum ETF. Open USD confirmed it was deployed on Ethereum at launch, with over 140 participating companies in its ecosystem.

When a string of events unfolds in succession, it ceases to be coincidence and becomes a mature financial architecture.

Vlad Tenev has dubbed it the global tokenization supercycle. Tom Lee takes it a step further: "The phrase 'tokenization supercycle' may actually underestimate the coming transformation." I find his perspective well-founded.

Tokenization is merely the first, most visible layer of change. Behind it lie stablecoins, programmable collateral, 24/7 trading markets, and instant settlement. Looking ahead, AI agents will autonomously execute trades, negotiate, and make peer-to-peer payments. There will be no more constraints imposed by banking hours, no reliance on T+1 settlement mechanisms, no more excuses like "wire transfers expected to arrive tomorrow," and likely no need for manual intervention to track where funds are going.

Doesn’t that sound familiar?

The first AI-driven rally revolved around compute power. The next wave may require precisely this kind of currency natively rooted in software infrastructure.

Bitcoin taught Wall Street the value of digital scarcity; Ethereum will teach Wall Street the value of programmable capital.

Here lies a particularly intriguing point.

On July 1, Ethereum traded at roughly $1,560; by the end of August, it surged to approximately $2,450. Meanwhile, the volume of institutional businesses built around Ethereum continues to expand, launched products grow increasingly sophisticated, and real-world use cases move beyond theoretical models. Yet, the actual Ethereum held by traditional institutions remains pitifully low.

For many years, completely avoiding Ethereum allocation in portfolios was the safest career bet in finance. Nobody ever got fired for missing out on Ethereum. Fund managers didn’t have to justify before investment committees why their portfolios lacked Ethereum.

But when BlackRock, J.P. Morgan, Robinhood, Revolut, Fidelity, Morgan Stanley, Crédit Agricole, and Neuberger Berman all start positioning themselves heavily in Ethereum, the situation changes entirely.

One day, the questions from investment committees will flip completely: shifting from "Why should we allocate to Ethereum?" to "Wait, please tell me again, why do we have absolutely zero allocation?"

This is the short squeeze I’m truly focused on. It has nothing to do with publicly disclosed short positions, perpetual contracts, or those traders opening 50x leverage at 3 AM.

Ethereum’s largest short position may well be the countless investment portfolios worth trillions of dollars that still maintain a zero ETH allocation.

Stop and re-read that sentence. Think about it carefully.

If you are actively shorting Ethereum, you know you’re betting against it. But if you manage a traditional portfolio, choose zero Ethereum allocation, and watch the financial system increasingly build upon Ethereum, you will eventually realize: zero allocation itself is a position. That is precisely what makes this entire scenario so compelling.

The political wind in Washington is also shifting. The focus of industry discussion has moved from "Should cryptocurrency be integrated into the financial system?" to "Alright, so how do we actually integrate it?"

The CLARITY Act remains unresolved and may face further delays. Almost everyone anticipated this.

But if the bill achieves genuine bipartisan substantive progress—as has happened many times in U.S. history—the landscape will look completely different. Another delay won’t cause much shock; however, a substantive breakthrough will force institutions to rapidly reassess timelines and adjust their positions.

My core thesis does not rely on the CLARITY Act passing; its passage would only accelerate the entire process.

Kostolany also shared a lesson frequently forgotten by investors: markets rarely reward ideas in a straight line along the original logic. First, an idea is born, then comes a long wait, often accompanied by painful corrections. Only much later will everyone come out to explain that the outcome was inevitable all along.

Ethereum will undoubtedly experience multiple "minus 1" pullbacks of its own in the future, and I fully expect them.

But look at the present: Wall Street no longer debates whether this underlying infrastructure is worth paying attention to; instead, it is practically building businesses on top of it. Portfolio allocators remain on the sidelines, debating whether to enter. Yet reality persists: the vast majority of investment portfolios still maintain a zero Ethereum allocation.