Record ETH Shorts: $11.3B and a Sudden Reversal
Ethereum [ETH] experienced a dramatic day on February 19, 2025, with $11.3 billion in short positions opened—a historical high. This massive bearish bet indicated widespread expectation of a price drop. However, the market reacted unexpectedly.
Record Short Positions in ETH
For the past two weeks, ETH traded within a tight range of $2,500 and $2,700. The surge in short positions pointed to strong bearish sentiment, as traders anticipated a price decline. A significant order imbalance further supported this bearish outlook, with sell orders exceeding buy orders.
Source: X
Source: MobChart
A Sudden Market Reversal
Despite the massive short positions, ETH prices initially dropped but swiftly rebounded, climbing from $2,604 to $2,670, and even reaching a high of $2,698. This sharp reversal strongly suggests a short squeeze, where traders were forced to cover their short positions, driving the price up.
Source: Coinalyze
Further evidence of bullish sentiment comes from the positive turn in Ethereum's futures basis. A positive basis indicates that futures are trading at a premium to spot prices, suggesting optimism about future ETH price increases. This is reinforced by the positive funding rate (OI weighted), which shows investors are willing to pay a premium to hold their positions.
Source: Messari
What This Means for ETH
While the massive short positions initially indicated bearish pressure, the subsequent short squeeze led to a temporary price surge. The market now appears somewhat indecisive, with neither bulls nor bears possessing the strength to dominate. ETH is likely to continue sideways trading in the short term.
- Short-term outlook: Continued sideways trading is expected.
- Potential upside: A sustained price increase could push ETH towards $2,723.
- Potential downside: A retracement could bring ETH down to $2,600.
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