CF Benchmarks CEO Says Ether Rally Fueled by Short Covering, Not Fresh Buying
Ether’s recent surge in price is mainly the result of traders closing out bearish positions rather than new buying interest or leveraged long bets, according to Sui Chung, CEO of crypto index provider CF Benchmarks.
Since early April, Ether (ETH) has gained nearly 90%, reaching above $2,600. However, Chung told CoinDesk that this rally is largely driven by short covering—where investors buy back futures contracts they previously sold—rather than an influx of new long positions, particularly on institutional trading platforms like the Chicago Mercantile Exchange (CME).
“Short covering temporarily increases demand and can push prices up, but it’s not the same as fresh bullish conviction,” Chung explained.
Supporting this view, data from CME futures shows the ether futures basis—a measure of how much futures prices exceed spot prices—has remained steady between 6% and 10% annualized over the past month. Normally, a genuine bullish rally would see this basis widen as new leveraged longs come in.
Some market participants have suggested arbitrage strategies involving shorting futures while buying spot ETFs may be keeping the basis in check. However, inflows into U.S.-listed Ether ETFs have been muted, with net positive inflows on only ten trading days in the last four weeks, and just once surpassing $100 million, according to SoSoValue data.
“The muted inflows and stable futures basis indicate this rally is primarily about short sellers closing positions rather than new buyers entering the market,” Chung said.
