Hedge Funds Are Shorting Ethereum In Record Numbers—Short Squeeze Incoming?
Hedge funds are piling into Ethereum shorts at unprecedented levels—betting big against the world’s second-largest crypto. Are they setting themselves up for a historic squeeze?
Record Short Interest
Institutions are loading up bearish positions like never before. Ethereum’s open interest in shorts has hit an all-time high, signaling a massive wave of skepticism—or outright pessimism—from big-money players.
The Mechanics Behind the Move
High leverage, crowded trades, and whispers of regulatory overhang are fueling the fire. Some funds see ETH as overvalued relative to Bitcoin—others are hedging exposure amid macro uncertainty. Either way, the pressure’s building.
Potential Squeeze Dynamics
A sudden spike in buying pressure—whether from retail FOMO, a major protocol upgrade, or an unexpected macro catalyst—could trigger cascading liquidations. Shorts get squeezed when prices rise, forcing panicked covering and accelerating the rally. We’ve seen this movie before.
Of course, hedge funds have a long and storied tradition of being spectacularly wrong at the worst possible moments—just ask anyone who shorted Tesla or GameStop.
Ethereum Shorts Reach Record Levels
As the ethereum price has crossed $4,000, so have the shorts piled on, with many expecting the rally to run out of steam. Mostly, these short numbers are being driven by large hedge funds, pushing down the Ethereum price. This is not the first time, as hedge funds have continuously tried to suppress the ETH price in order to minimize losses on their end.
According to data from the Net Positions of CME Ether Futures dashboard on The Block’s website, these short numbers have actually risen to levels not seen before. For hedge funds alone, they have almost doubled their short positions in the month of August.
As the website shows, the total number of hedge fund-driven Ethereum shorts was sitting at $2.3 billion on August 5. However, this figure has quickly grown to $4.19 billion at the time of this report. This suggests that hedge funds are still expecting the Ethereum price to break down from here.
Other Positions On ETH
In contrast to hedge funds, asset managers have remained rather bullish on Ethereum. The data shows that they continue to be long Ethereum, rising to over $1.22 billion in the positive at the time of this report. While this is prominent, it still falls short of the bearish positions, showing that there is more shorting going on.
Non-reported positions remain in the positive at $77.5 million. Meanwhile, there is also the “Others” position, which often encompasses retail and the likes, and that comes out in the negative at -$397.5 million, adding more fuel to the shorting going on.
For the hedge funds, the more the ethereum price rises, the more they lose money, and the lower the price goes, the more money they make. However, with short positions at record levels, historical performance suggests that times like these are when a short squeeze is likely, and the price could rally as a result.
