Open interest from leveraged funds has surged, with net positioning (long minus short) at the CME now standing at –18,438 contracts, according to the latest CFTC Commitment of Traders (CoT) report. This marks the largest net short exposure in Ethereum’s history.

At first glance, such extreme positioning signals deeply bearish sentiment. Yet it also sets the stage for a potential short squeeze, which could trigger a sharp rally. In fact, on July 13, crypto commentator zerohedge highlighted a record high in institutional ETH shorts — followed by an 80% price surge.

Still, the longer-term picture is far less clear. Since 2023, net positioning has remained negative almost continuously, reflecting a steady build-up of bearish bets. The number is not a straightforward trading signal, partly because many shorts are used as part of delta-neutral strategies, where hedge funds balance futures exposure against spot ETFs. In such cases, funds are not necessarily betting on lower prices but rather collecting arbitrage spreads.

It’s also worth noting that CME futures mainly reflect U.S. institutional activity, not the broader global market.

These record shorts come as Ethereum remains in a clear uptrend, fueled by strong inflows into spot ETFs and growing corporate treasury holdings, including purchases from firms like BitMine. Recently, ETH came within striking distance of a new all-time high, and at the time of writing, it trades around $4,250.