Bets Against Price Of Ethereum Hits All-Time High As Price Continues To Tanks


Ethereum, the world’s second largest cryptocurrency by the market has suffered huge declines as the crypto market undergoes a correction, things do not look so good as the bets placed by investors against Ethereum (ETH) reaches an all-time high.

Bets against Ethereum hits an all-time high

As the market decline continues, Bitfinex on September 7 reported that the number of short orders placed on the Ether (ETH) hit a new all-time high during Friday’s trading session.

According to data from the cryptocurrency exchange, at around 10:00 UTC on Friday, the number of shorts placed on ETH/USD, surpassed the previous high of 202,854 to ultimately reach a new high of 208,689.

To reach the new figure, the shorts placed on the ETH/USD rose by 81.96 percent on a week to week basis and a jump of 162 percent from mid-August.

Bad week for the crypto market

The news of an all-time shorting high follows an unfavorable week for Ethereum and the entire cryptocurrency market at large.

Pioneer crypto, Bitcoin (BTC) fell more than $1100, accounting for a nearly 15 percent drop from September 5-6. In the same period, the Ether shed more than 20 percent of its value.

Bets Against Price Of Ethereum Hits All-Time High As Price Continues To TanksAs is common in the crypto market, the drop caused a ripple effect, and in that time over $40 billion was shed from the market capitalization of all cryptocurrencies.

Major investors are shorting Ethereum

Although the crypto market has been undergoing correction all year, some major crypto investors think it has more room for the price of the Ether to decline, hence the continuous aggressive bet against it.

The current price of Ethereum ($194.60) reflects more than 85 percent drop from its all-time high of $1,300 in January. The current state of the market is perhaps the reason why investors are confident in shorting the Ether.

Major investors such as New York-based Tetras Capital has been shorting Ethereum.

In July, Forbes reported that Timothy Young, a former entrepreneur who sold tech startup Socialcast for more than $100 million in 2011, was also shorting Ethereum through his San Francisco family office, Hidden Hand Capital.

Asides the persistent bearish trend, investors are also concerned about the scalability issue of Ethereum. The World’s second largest cryptocurrency controls $48 billion in market cap but the network can only handle about 15 transactions per second.

The issue of scalability is a long-standing one, and Ethereum developers are currently working on several solutions to improve network capacity.

Many major investors believe that the network would record more substantial growth after the issue of scalability has been fixed on the network.

Could Ethereum force a squeeze?

The theory behind a ‘squeeze’ is the possibility of the Ethereum seeing a rapid price increase at a time when short trading it becomes overcrowded.

When shorting hit a high, and short positions are piled up, a small increase in price could cause those shorting to close positions in order to avoid a losing trade.

This is possible as the only way to close a short is buying back the cryptocurrency. It’s possible that Ethereum could see a rapid price increase or a ‘squeeze.’

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