An analysis firm has suggested that its clients hedge their optimistic bitcoin positions by initiating short positions in ether , the native token of the Ethereum network, indicating a departure from the generally positive predictions for an end-of-year ETH surge.
“Our altcoin strategy remains in favor of short ETH with respect to long BTC,” said Markus Thielen, founder of 10x Research, in a client note on Friday.
Engaging in shorting ether may serve as a solid hedge, particularly since the ETH digital asset treasury (DAT) outlook seems rather weak.
Thielen elaborated that the production of new shares by Bitmine Immersion Technologies, a significant buyer of ether this year, has diminished since September as retail interest has notably fallen. With limited avenues for raising further capital, Bitmine’s ability to acquire additional ETH is currently restricted.
Consequently, “if Bitmine is maxed out, Ethereum’s potential for growth might be capped, at least temporarily,” Thielen remarked.
He pointed out the negative sentiment towards ether reflected in the Deribit-listed options as another indicator of investor reluctance regarding ether. According to Per Thielen, traders are increasingly opting for put options on ether, revealing growing concerns about potential declines. Conversely, bitcoin’s options open interest has soared to a historic high exceeding $50 billion, largely fueled by the demand for bullish positions through calls.
Finally, insights from Google search data suggest a diminishing number of new Ether purchasers, rendering it susceptible to price drops, he argued.
Collectively, these elements imply that ether may suffer more significantly if bitcoin breaks away from its prolonged sideways trading pattern, surpassing $100,000.
“A straightforward long-BTC/short-ETH strategy remains appealing in this context and should continue to offer protection — even if Bitcoin eventually breaks its triangle to the downside,” Thielen concluded.
As this report was written, ether was trading at $3,815, experiencing a decline of over 3% in the past 24 hours. Bitcoin was priced at $108,820, down nearly 2%, per CoinDesk data.
