Ethereum shorts have almost doubled in the past two days from about 160,000 eth to now ◊307,000, some ◊27,000 above its previous all time high on September 18th.
Back then, ethereum shorts fell from ◊280,000 to just ◊100,000 on September 22nd. To then go on and triple in just three weeks.
That’s close to a reverse mirror of ethereum’s price action. It fell between September 17th-18th to a local bottom, with shorts so reaching the then all-time high (ATH).
Price then rose up to September 22nd, with shorts so closing. Then there was some sideways movement until this Thursday when eth suddenly fell, so sending shorts spiking to all time high.
Some 150,000 longs closed in the meantime, which means they sold as longs borrow fiat to buy eth in the hope price increases. Then sell eth at hopefully a higher price, so returning the fiat and pocketing the difference.
Obviously price can fall instead, with the long position so being in the negative. So at some point they sell the eth to give back the fiat while having to pay the difference with their own money.
In addition, 150,000 eth were sold by shorters, who borrow eth and sell it in the hope price goes down so that they can buy the eth cheaper and give it back.
At some point these shorts will have to close, which means they have to buy eth. In some cases price can move fast in a shorts cascade of sorts as everyone rushes to close their position.
That can lead to even more buying pressure, with shorts now close to the level of longs for the first time in months.
It looks like bitcoin hasn’t had much movement in shorts and longs, while ripple has had a spike, but longs remain far above in xrp.
Eth has seen the biggest spike of the week in shorts, with bears thinking it might go lower after it breached $200.
Ethereum however has been able to somewhat hold that level, placing shorts at risk of going underwater depending on how price now unfolds.