- Leveraged funds hold a large short position on Ethereum futures, signaling bearish sentiment.
- A short squeeze could erupt if Ethereum prices rise unexpectedly.
- Asset managers and dealer intermediaries lean bullish, potentially supporting prices.
- Traders should watch for changes in leveraged fund positioning for the next big move.
Ethereum Next Big Move: Crash or Short Squeeze?
Ethereum’s price could face two extremes: a sharp decline or a sudden surge driven by a short squeeze. The latest Commitment of Traders (COT) report reveals that leveraged funds are betting heavily against Ethereum. But if the market turns against them, it could spark a dramatic reversal.
What’s the COT Report, and Why Does It Matter?
The COT report, published weekly by the Commodity Futures Trading Commission (CFTC), shows how major market players are positioned in futures contracts. It’s a valuable tool for crypto traders wanting to understand the market’s mood.
How It Works:
- Traders open long or short futures positions.
- Every Tuesday, firms report these positions to the CFTC.
- By Friday, the CFTC publishes the data.
Trader Categories Explained:
- Leveraged Funds: Speculators aiming for short-term profits.
- Dealer Intermediaries: Banks and brokers hedging risk.
- Asset Managers/Institutions: Long-term investors.
- Other Reportables & Nonreportables: Large and small traders outside the main categories.
Latest ETH Futures Positions: A Bearish Bet
As of July 1, 2025, leveraged funds hold a dominant short position:
- 12,574 short contracts (51.7% of total open interest)
- Only 1,275 long contracts (5.2%)
In contrast:
- Dealer Intermediaries are mostly long (66.5%), reflecting their hedging activities.
- Asset Managers/Institutions are also net bullish, with 12.4% long and just 2.2% short.
This imbalance suggests that while speculators expect ETH to drop, long-term players may view any decline as a buying opportunity.
Also Read: Ethereum Price Prediction: Will ETH Rebound as Investors Flock to Wall Street Pepe?
Ethereum Price Outlook: Two Possible Scenarios
Immediate Term (Next Few Days to Two Weeks):
Expect downward pressure and volatility as leveraged funds try to profit from their short positions. ETH could dip toward key support zones.
Medium Term (Next Few Weeks to a Month):
Watch for potential stabilization or reversal. If asset managers step in at lower prices, ETH could rebound. A sudden rise could trigger a short squeeze, forcing speculators to buy back their positions—driving prices sharply higher.
Key Metric to Watch:
If leveraged funds start covering their shorts (reducing bearish bets), it could mark the start of a rally.
Conversely, if they increase their short positions, expect further downside.
