Ethereum has been stuck in the $2,500 to $4,000 trading range for a year, underperforming Bitcoin and other major cryptocurrencies.
While altcoins like Bitcoin and Solana have reached record highs since the beginning of the year, the ETH price remains around 80% below its all-time high of $4,800 set in November 2021.
“Ethereum Is Being Shorted by Wall Street Hedge Funds”
Analysts point to significant shorting by hedge funds as a key factor behind ETH’s stagnation. According to The Kobeissi Letter, short positions on Ethereum have soared, increasing by 40% in just one week and a staggering 500% since November 2024. “Wall Street hedge funds have never been this short on Ethereum in history, and not even close,” the publication said.
These aggressive short positions have severely prevented ETH from breaking out of its long-term range, suppressing price action despite strong trading volumes in recent weeks.
There were two significant spikes in trading volume. The first occurred on January 21, a day after Donald Trump’s inauguration, as investors reacted to potential policy changes under the new administration. The second came on February 3, when Ethereum experienced a sharp sell-off amid a broader market decline. However, despite these swings, ETH has struggled to regain its previous price levels.
The Kobeissi Letter therefore asked: “Which brings up the next question: Why are hedge funds so determined to short Ethereum?”
Ethereum is facing both structural and market-related weaknesses, making it an attractive target for short sellers, according to Ilya Paveliev, co-founder of Arete Capital. Once a mainstay of ETH speculation, retail investors are increasingly migrating to alternative networks like Solana and Base, which offer lower fees and improved user experiences for memecoins and AI-driven applications.
Paveliev also suggested that Ethereum could eventually be perceived as a commodity similar to crude oil, and traded primarily in Bitcoin rather than US dollars. “Without aggressive ecosystem growth efforts, Ethereum risks stagnation as competitors continue to take market share,” Paveliev warned.
*This is not investment advice.
