The main reason for the low performance of Ethereum price may have emerged.

Ethereum, Bitcoin and other major cryptocurrencies have been stuck in a trading range of $2,500 to $4,000 for a year, performing beneath.

Altcoins like Bitcoin and Solana have reached record levels since the beginning of the year, while the price of ETH has remained approximately 80% below the all-time high of $4,800 set in November 2021.

"Ethereum Is Being Shorted By Wall Street Hedge Funds"

Analysts point to hedge funds taking significant short positions as a key factor behind the stagnation of ETH. According to The Kobeissi Letter, short positions on Ethereum surged by 40% in just one week and an astonishing 500% since November 2024. The publication stated, “Wall Street hedge funds have never been this short on Ethereum in history, not even close.”

These aggressive short positions have significantly hindered ETH from breaking out of its long-term range, suppressing price movements despite strong trading volumes in recent weeks.

There have been two significant increases in trading volume. The first occurred on January 21, the day after Donald Trump took office, as investors reacted to potential policy changes under the new administration. The second came on February 3, when Ethereum experienced a sharp sell-off amid a broader market downturn. However, despite these fluctuations, ETH struggled to regain previous price levels.

The Kobeissi Letter therefore asked the following question: 'This also brings the next question: Why are hedge funds so determined to short Ethereum?'

According to Ilya Paveliev, co-founder of Arete Capital, Ethereum is facing both structural and market-related weaknesses, which makes it an attractive target for short sellers. Individual investors, who were once the main element in ETH speculation, are increasingly migrating to alternative networks such as Solana and Base, which offer lower fees and enhanced user experiences for memecoins and AI-focused applications.

Paveliev also suggested that Ethereum could eventually be perceived as a commodity similar to crude oil and could trade in Bitcoin instead of the US dollar. Paveliev warned, 'Without aggressive ecosystem growth efforts, Ethereum is at risk of stagnation while competitors continue to capture market share.'