A recent advisory from the research group 10x Research encourages investors holding bullish positions in Bitcoin (BTC) to consider shorting Ether (ETH) as a risk management strategy. This recommendation contrasts with the generally positive outlook for Ether toward the end of the year.
Markus Thielen, founder of 10x Research, outlined in a client update that their altcoin model currently favors maintaining long Bitcoin positions while shorting Ether. The rationale centers on signs pointing to a less optimistic outlook for Ether compared to Bitcoin’s steady performance.
One key factor cited is the diminished demand from significant buyers of Ether. Bitmine Immersion Technologies, a prominent purchaser of ETH throughout the year, has slowed down its acquisition activity since September amid a notable decline in retail interest. With limited avenues for additional capital inflows, Bitmine’s ability to sustain strong Ether purchases appears constrained. Thielen remarked that this dynamic potentially curbs Ether’s price appreciation in the near term.
Investor sentiment further supports the cautious Ether stance. Data from Deribit, a major crypto options platform, reveals increased purchases of put options on Ether, signaling a growing expectation of downward price pressure. In contrast, Bitcoin’s options market displays robust activity with an all-time high of over $50 billion in open interest, predominantly driven by call options indicating bullish sentiment.
Additional insights come from Google search trends, which show a contraction in the number of potential new Ether buyers. This trend highlights a possible vulnerability in Ether’s price strength if demand continues to wane.
Combined, these elements suggest that should Bitcoin break out from its extended period of stable trading above the $100,000 threshold, Ether may experience comparatively larger declines. Thielen emphasized that adopting a position of long Bitcoin and short Ether could provide effective downside protection for investors, even if Bitcoin itself reverses direction.
At the time of reporting, Ether was trading around $3,815, marking a drop of more than 3% over the previous 24 hours. Bitcoin was priced near $108,820, down almost 2%, according to data from CoinDesk.
