Leveraged short position contracts for Ethereum have reached insane levels, sparking the possibility that the asset may rebound to release the saturation.
Since the start of the year, Ethereum has been one of the worst-performing high-caliber cryptocurrencies. For context, the second-largest crypto asset by market cap has corrected a staggering 20% year-to-date, compared to BNB’s 14% downside and XRP’s 18% uptick.
Ethereum failed to sustain the intense upward price action seen when it rebounded 35% in one day on Monday amid macroeconomic factors. The asset closed the week with an 8% correction, posting its second consecutive weekly negative trend.
Meanwhile, Ethereum’s general underperformance has drawn heightened bearish sentiment around the asset. Most recently, the altcoin king recorded a rare history barely seen in a bull market condition.
Ethereum Shorts Hits New Highs on CME
Based on the cyclical phase, the crypto market is still on a bull run. However, Ethereum shorts have surpassed the bear market highs on the Chicago Mercantile Exchange (CME).
Altcoin Daily shared today that bear calls for Ethereum have reached a new all-time high. An accompanying chart shows these peak shorts are on the CFTC CME Ether cash-settled leveraged contract.
The long-to-short coefficient on the Ethereum contract has reached an unprecedented level, with the chart showing a factor of -11,341. Notably, this bearish sentiment has grown intense since late 2024, before the latest new high.
Interestingly, this trader disposition has come despite recent bullish calls. Most notably, Eric Trump, Donald Trump’s second son, nudged investors to start buying Ethereum at this point, insinuating it is a perfect entry.
Short Squeeze Incoming?
Meanwhile, the intense selling pressure on Ethereum has raised speculations of a short squeeze. Market observers believe that the second-largest cryptocurrency by market cap will pull a strong bounce in the direction opposite the predominant leveraged bets.
Assets have a history of putting in such a contrarian play, especially when they are heavily shorted. This pump is to release saturation and cut out overleveraged traders before its next directional trend.
In the meantime, Ethereum has shown signs of life with a strong start to the week. The asset rebounded 4% from an intraday low of $2,561 to trade at its current price of $2,658.
Moreover, Ethereum has held a significant support at $2,600, a level prominent analyst Ali Martinez identified as the bottom of its multi-year ascending triangle. He noted that the altcoin king could rebound to $3,000 or even $4,000 if it sustainably holds the crucial region.
