Is An Ethereum Short Squeeze Coming? - Market Update - 2-12-25

Performance dashboard, expected moves, and cross asset correlations.

*|MC_PREVIEW_TEXT|* Hello my tasty friends, please find our mid-week crypto market update below. Traders are short ETH in size. According to position data from the CME and Deribit, traders are betting ETH goes a lot lower from here. Shorts are ramping up, with $130 million in puts targeting a $2,000 strike price while a record $1.45 billion short has been amassed on the CME—the largest in history. Short interest has surged 500% since November, defying expectations of an immediate post-election rebound. At the same time, ETH ETFs brought in $790 million last week, outpacing Bitcoin flows for the first time this year. It's nuanced, as some of this short positioning likely reflects the basis trade, where you go long spot/ETF and sell futures against it, capturing the spread. Or, all the bears are right and we tag 2k or lower... I just know I wouldn't want to be on the wrong side of an ETH squeeze.   Uniswap launches its L2. Uniswap has introduced Unichain, its new Ethereum Layer-2 blockchain, which it's claiming is the "fastest chain in the industry" after processing 88 million test transactions. Designed to enhance DeFi efficiency, Unichain offers one-second block times and 95% lower gas fees than Ethereum, supporting cross-chain liquidity and decentralized app deployment. As a leading DEX, Uniswap aims to reduce congestion and costs on Ethereum but faces concerns that Layer-2 solutions could erode Ethereum's market cap over time.   Stablecoin growth is a bullish signal for adoption. Total stablecoin market cap is now $211 billion after expanding by $16.97 billion year-to-date. A great start to 2025 and a signal of bullish momentum for Bitcoin and crypto at large. Tether (USDT) leads with a $141.9 billion market cap, while Circle's USDC rebounded to $56 billion after a previous low of $24 billion in November 2023, reflecting a 78% year-over-year growth. This surge in stablecoin supply enhances liquidity, and historically has preceded increased buying pressure across crypto assets. The chop fest continues with bitcoin sliding lower as we approach mid-week, though the 90-110 range still holds. I think the market will likely frustrate everybody over the next few weeks. ETH's bearish price momentum continues and has now spilled over into the weekly timeframe. Recently ETH has bottomed out around 2,100 with a ceiling near 4k.  On a relative basis ETH and BCH are two of the worst performing tokens vs BTC, to start the year.  On the flip side, LTC has show strong relative outperformance against BTC, +11% YTD and its short-term trend has recently moved from bearish to neutral. Maybe it's the whispers of an LTC ETF coming. BTC implied and realized volatility continues to slide lower alongside price. IV Ranks are near the lows for BTC, while ETH vol is stuck in the middle of its range.  Bitcoin's weekly expected range is pricing in a possible move under 90k, but we've traded here before in mid-January. ETH is pricing an expected move that could take us back to pre-election prices. If we're going to get a move in ETH either way, maybe there's a vol trade to be had as ETH implied is only trading at an 8% premium to realized.  In the immediate-term, cross-asset correlations have moved back towards zero, though the positive relationship between BTC and risk assets remains over longer durations. Should the stock market get spooked by a slowdown in growth or corporate earnings, or tariffs, or whatever, we think it's unlikely crypto markets are immune. That said, a weekly pullback of more than 10% within BTC's bullish trend, should present an opportunity to add to long-term positions, assuming nothing terrible happens with the US economy in the meantime. Relative performance (weekly): ETH/BTC  -2%  SOL/BTC  -3% SOL/ETH  -1%   The tastycrypto Show: Mondays & Wednesdays from 4:30pm - 5:00pm Central BAG BATTLES: Mondays on the OTC Live Show from 11am - Noon Central LIVE on YouTube | LIVE on X | LIVE on tastylive Contact |  Blog  |   Learn If you no longer want to receive our communications, please click here. tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. and tastytrade, Inc. Neither tastylive, Inc. nor tastytrade, Inc. are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved, including volatile market prices, illiquid market conditions, lack of regulatory oversight, market manipulation, and other risks. tastylive, Inc., 19 N. Sangamon St., Chicago, IL 60607, United States