Ethereum shorts reach historical high of $11.3B! What it means for ETH

• ETH prices have made a moderate recovery, rising 1.88% in 24 hours.
• Ethereum’s short positions hits a historical high of $11.3 billion.

Over the past two weeks, Ethereum [ETH] has remained stuck within a consolidation range of $2.5K and $2.7K. As such, both bulls and bears have attempted to have total control of the market without success.

The past day saw this battle escalate to extreme levels, with Ethereum seeing a record-breaking number of short positions.

$11.3B short positions opened for Ethereum

Over the past day, a total of $11.3 billion worth of short positions were opened for Ethereum, which is now the highest in history.

Such a high number of short positions implies that most traders were expecting prices to decline, thus reflecting strong bearish sentiments.

Notably, massive short positions often result in high downward pressure as sellers dominate the market.

This dominance by sellers is further evidenced by surging order imbalance favoring sellers. As such, a bearish crossover emerged on order imbalance indicating more sell orders than buy orders.

If ETH’s price drops, more shorts could pile up, leading to further decline.

What it means for ETH

While Ethereum saw historical short positions opened as prices started to drop, prices recovered shortly after from $2604 to $2670.

In fact, ETH prices saw a reversal to reach a high of $2698. Such a sudden reversal implies that after many short positions were opened, Ethereum experienced a short squeeze.

This implies that these short positions were forced to close, strengthening prices to the upside. Therefore, in short term, the markets are optimistic and Futures are getting back to the market.

Additionally, Ethereum’s Futures basis have all recovered and turned positive as of this writing. This suggests that Futures are trading at a higher rate than spot prices, implying that traders are bullish on future prices.

This is further validated by the Funding Rate (OI weighted), which turned positive after the previous decline to negative territory.

A positive Funding Rate implies that investors are willing to pay a premium fee to hold their position, reflecting bullish sentiment.

Simply put, although Ethereum has experienced record-breaking short positions, bears have failed to retake the market. ETH will continue to trade sideways as both bulls and bears have lack strength to dominate the market.

If the moderate gains on daily charts hold, ETH will attempt a move towards $2723. However, with sellers still on the market, a retrace here could see ETH drop to $2.6k.