Record Ethereum Shorts at CME Led by Hedge Fund

Hedge funds have set a new record for short positions in Ethereum on the Chicago Mercantile Exchange (CME), pushing these positions to an all-time high. This de...

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Hedge funds have set a new record for short positions in Ethereum on the Chicago Mercantile Exchange (CME), pushing these positions to an all-time high.

This development comes as Ethereum struggles to maintain momentum above the $4K mark despite strong capital inflows into spot ETFs and generally optimistic market sentiment.

Ethereum Faces Record Short Bets Despite Positive ETF Fund Flows

Over the past three weeks, Ethereum ETFs have recorded steady inflows, accumulating more than $2 billion in new funds. According to data from SpotOnChain, the chain included a record weekly capital of $854 million, the highest since the product launch. These developments have sparked optimism from some market participants.

Ethereum ETF Fund Flow. Source: SpotOnChain

However, this capital inflow does not mean a significant breakout in Ethereum price. On the contrary, the price performance of this cryptocurrency remains stagnant, causing much skepticism among investors.

Analysts attribute this to an increase in short positions on the CME benchmark Ethereum futures contract, which reached a record of 6,349 contracts, according to data from Zerohedge. These short positions are often used to profit from falling prices, representing a cautious view on Ethereum’s short-term potential despite widespread market optimism.

Hedge funds short position Ethereum. Source: X/Zerohedge

Despite hedge funds betting against Ethereum, long-term market sentiment remains positive. Many traders expect Ethereum to surpass its previous all-time high as market fundamentals remain strong.

In fact, blockchain data from CryptoQuant suggests that Ethereum’s strike price range sits at $5.2K USD, pointing to upside potential as supply and demand dynamics develop.

“The strike range, currently at 5.2K, matches the level seen during the peak of the 2021 bull run, suggesting the potential for further strong growth,” the company said.

Furthermore, Ethereum’s network activity continues to show steady interest. Analytics platform Santiment reports that more than 130K new Ethereum addresses were created daily in December, marking an eight-month high.

Ethereum network activity. Source: Santiment

As a result, data from IntoTheBlock shows that Ethereum’s weekly transaction fees have skyrocketed to $67 million, the highest since April, due to strong DeFi activity and a market correction following a market retreat. 100K USD recently.