Ethereum Faces Record Shorts and Staking Surge
Ethereum (ETH) is approaching a potentially explosive moment as multiple indicators suggest an incoming supply shock. With leveraged short positions surging to historic highs, staking levels reaching new records, and exchange outflows accelerating, analysts are watching closely to see whether this dynamic turns bullish—or disastrous.
A chart shared by ZeroHedge on X shows aggregate short positions on ETH OTC and cash contracts plunging to -13,291, the sharpest drop since early 2025. However, experts like Fejau argue this isn’t pure bearish sentiment but rather a basis trade—a hedge fund strategy capturing a delta-neutral yield of around 13% annually by shorting ETH futures on CME while buying spot ETH for staking rewards of 3.5%.
Staking Hits All-Time High, Liquidity Drops
The pressure on ETH supply is mounting. According to Dune Analytics, over 29.03% of total ETH supply is now staked, leaving only about 121 million ETH in circulation. This reduction in available supply is exacerbated by large withdrawals from exchanges. On Friday alone, more than 140,000 ETH (roughly $393 million) exited centralized platforms—the largest single-day withdrawal in over a month, per Sentora.
This decreased liquidity can act as rocket fuel for prices when demand rises. Analysts like MerlijnTrader suggest this setup, combined with a potential short squeeze, could drive ETH as high as $10,000 in this market cycle.
Bullish Setup or Another Black Thursday?
While momentum builds, risks remain. The same basis trades that hedge funds now favor were vulnerable during 2020’s “Black Thursday”, when extreme volatility caused major losses. If ETH’s price fails to rally, these positions could backfire, triggering broader market turmoil.
ETH is currently trading above $3,000, still about 38% below its November 2021 all-time high, but the ingredients for a dramatic move—up or down—are unmistakably in place.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
