Why Ethereum Traders Are Starting to Bet Big Against the Price of ETH

Published in: May 8, 2024

• Short positions increase following Grayscale’s decision to withdraw its Ethereum futures ETF application.
• Market sentiment turns bearish with further declines possible.

Ethereum [ETH]the second largest cryptocurrency by market capitalization, has recently shown a lack of significant bullish momentum, in contrast to Bitcoins [BTC] recent increase.

Although Ethereum reached over $4,000 in March, it failed to establish a new all-time high, unlike Bitcoin, which skyrocketed to a new peak in the same period.

In the last two weeks, Ethereum has seen a drop of almost 10%, and this downward trend has continued in the last 24 hours, with a drop of 2.2%.

This bearish sentiment is reflected in the actions of Ethereum traders, who have been increasing their short positions, particularly after a significant development from Grayscale Investments.

The strategic retreat of grayscale

Grayscale Investments Recently withdrew his application for an Ethereum futures exchange-traded fund (ETF), a move that has significantly impacted trader sentiment.

This decision, made just three weeks before the US Securities and Exchange Commission (SEC) issued its verdict, has led to an increase in short positions in Ethereum.

Merchants currently betting big in further declines, with $358 million in short positions ready to be liquidated if prices rise just 4%.

By contrast, a 4% drop would only eliminate $237 million in long positions.

This withdrawal aligns with broader concerns about Ethereum’s regulatory status, particularly regarding its classification as a security and the fate of Ethereum spot ETFs.

As the May 23 decision date approaches, analysts and market participants are becoming increasingly skeptical about the approval of these ETFs.

According PolymarketMore than 90% of participants believe that the Ethereum spot ETF will be denied.

How is Ethereum doing?

Beyond concerns about ETFs, Ethereum faces issues with its overall usage and a lack of speculative interest, especially from short-term holders.

James Check, a leading on-chain cryptocurrency analyst, he pointed that Ethereum usage is so low that its recording mechanism cannot keep up with issuance to validators.

This sentiment was echoed by glass nodewhich highlighted Ethereum’s underperformance relative to Bitcoin due to a lag in speculative interest from these short-term holders.

Read Ethereum [ETH] Price prediction 2024-2025

From a technical perspective, Ethereum price is expected to continue its downward trajectory until reaching low liquidity near $2,800.

This is because Ethereum price has recently touched a block breaker and the next target is to hit the important low on the 4-hour chart.

This is an automatic translation of our English version.