We want to talk about the trend that we have been discussing for several weeks on our blog, and that is that there has been a lot of speculation in the crypto community about the Alt season and the dominance of BTC over other cryptocurrencies. We saw that with the effects of this extreme positioning on February 2nd. Ethereum fell -37% in 60 hours when headlines about Trump's trade war appeared.

It seemed almost like the sudden crash seen in stocks in 2020, but without headlines, the entire market was talking about a Black Monday (we did too, you can see it on our blog every Monday with weekly updates from the financial and crypto world). But on Monday and Tuesday it turned out to rebound and recover part of what it had fallen, leaving the idea of ​​Black Monday as a passing paranoia.

But something is true about that "almost" Black Monday, More than $1 billion was lost in cryptocurrencies in HOURS. (2.3B total)

Interestingly, even as short exposure was increasing in December 2024, Ethereum inflows were above the alt average. In just 3 weeks, ETH saw +$2B of new funds with a record weekly inflow of +$854M. However, hedge funds are betting on ETH rising and limiting breakouts.

Furthermore, volume has been strong on ETH overall.

We saw large spikes in volume on January 21st after inauguration day. We also saw large spikes in volume around the crash on February 3rd.

Price action has failed to regain the gap lower even after a week has passed.

In fact, even as Bitcoin and other major cryptocurrencies have broken out, ETH is stagnant. ETH is currently trading a massive ~45% below its all-time high set in November 2021. Which is why the crypto community is starting to speculate about the possible and expected ALT season.

Why are hedge funds so dedicated to shorting Ethereum?

For years, there was fear that ETH would be classified as a security by the SEC, however, with the new SEC under the Trump administration, this seems unlikely, in fact, Eric Trump recently posted "it's a great time to add ETH" and prices briefly went up (remember to follow us, we posted this news that day just as we were commenting on the fact and we managed to anticipate the volatility of those hours).

The possible reasons why ETH remains in a state of undervaluation compared to previous bull markets range from market manipulation, to harmless crypto hedges, to the bearish outlook on Ethereum itself.

However, this is quite strange as the Trump administration and new regulators have favored ETH since 2024, even with the ETFs going off the market. But largely due to this extreme positioning against it, Ethereum has significantly underperformed Bitcoin.

Bitcoin is now 6x larger than Ethereum at one of its largest market caps since 2020.

Could Ethereum be preparing for a short squeeze?

This extreme positioning means that large swings like the one on February 3rd will become more common and surely before we see a significant move, we will see liquidations both above and below the present range.

And as always friends, stay alert because there are always opportunities in the market.

(and speaking of opportunities remember to visit our blog to learn more about our rewards system.)

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