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ETH · 3w

Institutional Interest in Shorting Ethereum Dries Up

Smart money is seemingly betting ethereum has bottomed as months of shorting by hedge funds has given way to plummeting Over the Counter (OTC) eth borrowing.

“Some of our largest single originations to date were ETH loans in March and May to hedge funds. Over the second half of the year, these hedge funds began covering positions as they realized profits and the short interest in ETH was replaced by other alternative assets.”

So says Genesis Global Trading, a registered crypto-broker that has lent about half a billion dollars worth of crypto to hedge funds and other entities.

“The bottom is in for ETH,” says Ryan Selkis, who came to prominence in 2014 after revealing MT Gox was bankrupt at a time when MT Gox customer support was saying funds are safe.

“Plenty of short interest, but genesis lends to smart money,” Selkis said. Referring to eth shorts on Bitfinex being near all time high.

Unlike what may be unsophisticated traders, however, hedge funds are apparently no longer daring to short ethereum.

Eth borrowing by hedge funds and other entities, October 2018.

As can be seen, hedge funds were willing to pay an 11% interest rate to short eth bigly back in March just before its price plunged from circa $900 to $350.

It then recovered to $800, but again plunged in June to circa $400, and continued to go lower, reaching what may be a bottom on September 12th at $167.

With eth’s price now standing at about $200, it looks like hedge funds are not willing to play any longer. Moving off to Ripple and seemingly staying stubborn in regards to bitcoin.

Ethereum’s price on weekly candles, October 2018.

Bitcoin, however, may have a different interpretation because Genesis says:

“Our clients are entirely institutional and include hedge funds, trading firms, and companies that use digital currencies as working capital…

Bitcoin demand remained consistent throughout the year, as it is the most widely u...

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