Ether’s Rally Fueled by Short Covering, Not Fresh Bullish Bets, Says CF Benchmarks CEO
Ether’s recent price surge, while notable, is largely driven by short covering rather than new buying pressure or leveraged long positions, according to Sui Chung, CEO of crypto index provider CF Benchmarks.
Despite Ether (ETH) climbing nearly 90% from its early April lows to over $2,600, the rally is primarily a result of traders closing out bearish positions, rather than fresh optimism fueling new longs on institutional platforms like the Chicago Mercantile Exchange (CME).
“When bears cover their shorts, they buy back futures contracts they previously sold, temporarily increasing demand and pushing prices higher,” Chung explained to CoinDesk. CME’s futures, popular among institutional investors, track CF Benchmarks’ Bitcoin Reference Rate – New York (BRRNY) variant.
Chung noted that the CME’s ether futures premium—known as the basis—has remained relatively flat between 6% and 10% annualized for one-month contracts, signaling that fresh leveraged longs have not significantly contributed to the rally.
“In typical bullish rallies, we expect the basis to rise as traders open new long positions,” Chung said. “The current steady basis suggests this move is more about risk reduction and position adjustments than new demand.”
Some argue that sophisticated arbitrage strategies—such as shorting CME futures while buying ETH spot ETFs—are keeping the basis subdued. However, ETF inflows tell a different story. U.S.-listed ETH spot ETFs have seen net positive inflows on only ten trading days in the past month, with just one day exceeding $100 million in inflows, according to SoSoValue data.
“The muted ETF inflows and stable futures basis indicate this latest price increase is not driven by fresh leveraged longs,” Chung concluded.
