TechFlow news, February 10 — According to The Kobeissi Letter, Wall Street hedge funds have built up short positions on Ethereum to an all-time high, increasing by 40% in just one week and by 500% cumulatively since November 2024. On February 2, Ethereum plunged 37% within 60 hours, wiping out over $1 trillion in market value across the cryptocurrency sector.
Data shows that despite strong capital inflows into Ethereum in December 2024—drawing more than $2 billion in new funds over three weeks, with a peak weekly inflow of $854 million—Ethereum's price remains approximately 45% below its November 2021 all-time high. It has significantly underperformed Bitcoin, whose market capitalization is now six times that of Ethereum, reaching the highest level since 2020.
Notably, this massive wave of short-selling appears particularly unusual given the Trump administration's friendly stance toward Ethereum, with Eric Trump publicly stating that "now is a good time to increase Ethereum holdings." The market has offered various interpretations, including market manipulation, hedging demands, or bearish sentiment on Ethereum’s fundamentals. Analysts warn that due to the excessive concentration of short positions, Ethereum could experience extreme volatility ahead, with a short squeeze not out of the question.
