Powerful Crypto Hedge Funds Are Shorting Ethereum (ETH) in a Major Way
Major Investors Short Ethereum
Following the massive price crash and market correction of Bitcoin last month, Ethereum experienced a similarly bleak outlook. The currency is the second-largest crypto on the market, both in terms of overall participation and trade volume. Ethereum saw a price plummet of over 36% so far this year, and continues to fall somewhat consistently, even while Bitcoin rises past its $8,000 marker. Despite the grim outlook, some investors predict that the worst it yet to come. In fact, an article from Forbes finds that many crypto investors are “betting heavily” against Ethereum moving forward.
It isn’t just the individual crypto-enthusiasts that predict a decrease in Ether price in the long-term, either. Massive cryptocurrency hedge fund Tetras Capital has made a name for itself for its implementation of complex analyses to predict market trends for large cryptocurrencies. This fund recently shorted Ether, predicting that the coins will crash in price and yield a profit for the company following recovery.
The beginnings of the short came in May of this year, when the company shorted at around $600. Now, the price of Ether is approximately $475. This was no coincidence. Tetras seems to be making a concerted and deliberated effort to short Ether for profit.
Tetras Short: The Reasoning
Ether (ETH) Bearish Thesis:
The “Flippening” of Market Irrationalityhttps://t.co/QizeLnf3D3
— Tetras Capital (@TetrasCapital) July 16, 2018
Luckily for cryptocurrency fans and investors alike, Tetras Capital has released an extensive report detailing their reason for what they call a “bearish thesis” on Ethereum. Occupying one of the top two high conviction investments for the USD $30 million hedge fund, the short on Ether is a serious position being held by the large company.
In their report, the company reasoned that the massive market speculation experienced in the past two years is “exhausting,” and that the slow march of financial reality is slowly digging away at the hype-generated prices which have driven the Ether/USD market in the past couple years. This investment firm believes that the commodity continues to be “overvalued,” and that another market correction is likely to take the price down even further.
Other Investors Short
Timothy Young gained fame in 2011 when he sold his startup company Socialcast for an unprecedented startup price of USD $100 million. Using some of the money from this success, he founded an investment firm called Hidden Hand Capital. Using Hidden Hand, he decided to short Ether as well.
Additionally, the large hedge fund Neural Capital decided to short Ethereum, says one inside source. Part of the confusion regarding Ethereum comes when people posit that the technology should be valued higher because Ethereum is a good idea and an effective network. But leading financial professionals are quick to point out that a good idea does not necessarily mean that the coin associated with the company ought to have significant value.
As the marker corrects itself following the unprecedented ICO boom of 2016 and 2017, many investors remain bearish on the future of Ethereum’s price. Much like Tetras reasoned, many leading shorting Ether investors postulate that the cryptocurrency was artificially inflated in worth as a result of increased public interest, and that this interest will likely deplete over time—and take its piece with it.