David Duong, president of Coinbase Institutional Research, said the claims of “the largest Ethereum (ETH) short position in history,” which are on the cryptocurrency market agenda recently, did not reflect the truth.
According to Duon, these comments are based on Chicago Mercantile Exchange (CME) data and actually point to an institutional arbitrary strategy.
CME leveraged fund short positions increased from $466 million in early May to $1.6 billion as of June 24, according to fund data held in CFTC cash.
Duon said this similarity was not a coincidence, arguing that the growing institutional interest in ETH spot ETFs is caused by differences in the base yield of CMEs. The difference between the yield between spot prices and futures prices, which was 6% per year in February, increased to 8%-9% in May and June. According to Duon, the situation presented an attractive opportunity for institutional investors seeking arbitration.
Ultimately, according to Duong’s analysis, the increase in short positions in CME is not a reflection of negative expectations for Ethereum, but rather an institutional arbitrage activity. Therefore, according to Duong, presenting this situation as “the biggest short position in history” does not reflect market reality.
*This is not investment advice.