Ethereum’s Great Short Squeeze: A Comedy of Carry Trades and Bearish Bets!

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Here’s the scoop:

  • ETH CME futures reveal a record preference for short positions.
  • Hedge funds are the primary actors in “carry trades” or outright bearish wagers.
  • ETH options hint at lingering downside fears and bullish long-term expectations.

Ethereum is facing an unprecedented short-selling spree on the Chicago Mercantile Exchange (CME) futures, leaving us all in stitches! 😜 While it might seem like a bearish omen, the situation is more of a circus act involving “carry trades” and a dash of outright bets against our beloved cryptocurrency.

As of the week ending Feb. 4, hedge funds have amassed a staggering net short position of 11,341 contracts in ETH CME futures. This 40% increase in just one week and a whopping 500% surge since November has left market observers in a fit of laughter! 😂

But wait, there’s more! According to Thomas Erdösi, head of product at CF Benchmarks, a significant portion of the short interest in Ether futures is tied to the infamous “carry trade” or arbitrage plays. Despite macroeconomic headwinds and Ether’s underperformance, U.S. ETH ETF inflows have remained steady, coinciding with the increase in futures short interest.

Carry trades, or basis trades, attempt to profit from price discrepancies between two markets. In Ether’s case, it involves hedge funds shorting the CME futures while simultaneously buying the spot Ether ETFs listed in the U.S.

Now, don’t be alarmed! Not all of these short positions are driven by carry trades. Some are outright bearish bets against Ether, as traders hedge against downside risks in the altcoin complex. However, ETH options on both the CME and offshore giant Deribit show a preference for put options expiring in the near-term, indicating lingering downside fears.

So, buckle up, Ethereum fans! It seems we’re in for a wild ride filled with carry trades, bearish bets, and a dash of humor. 😂

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2025-02-11 11:39