ETH Futures Shorts Rise Amid Institutional Trading Surge

Coinbase Institutional’s Research Director David Duong has addressed concerns over ETH’s reportedly large short positions. On June 24, ETH futures shorts topped $1.6 billion, paralleling substantial ETF inflows in the previous month.

Market observers point to brisk institutional activity as the primary driver behind the rising ETH futures shorts, highlighting a strategy of buying spot and selling futures to exploit basis trade yields.

ETH Futures Shorts Hit $1.6 Billion Amid Arbitrage Activity

Leveraged funds’ short positions in ETH futures rose significantly by late June, reaching a historic $1.6 billion, which is closely aligned with the $1.16 billion of net inflows into Ethereum spot ETFs. This activity is attributed not to outright bearish expectations but to institutionally-driven arbitrage trading.

Institutional interest in Ethereum stood out, driven by improved annualized basis yields. These rates rose from 6% in February to 8–9% by May/June, attracting large investors. Arbitrage trades capitalize on these spreads, rather than reflecting a fundamentally negative outlook on Ethereum.

**David Duong, Research Director, Coinbase Institutional,** – “The so-called ‘largest ETH short position in history’ is actually greatly exaggerated … This is because the annualized basis yield of ETH futures relative to spot increased from an average of 6% in February to 8%-9% in May and June, attracting more institutional investors to engage in arbitrage trading by buying spot and selling futures.”

Institutional Interest in Ethereum Bolsters Liquidity and Confidence

Did you know? Similar surges in futures shorting in ETH and BTC have historically aligned with increased spot ETF inflows, blunting aggressive price impacts.

CoinMarketCap data shows Ethereum (ETH) trading at $2,507.94 with a market cap of $302.75 billion and dominance of 9.10%. The 24-hour trading volume was over $11.85 billion, suggesting substantive ongoing market activity. ETH’s price changed negligibly by 0.16% in the past day but saw a 42.35% increase over three months.

Research suggests continued institutional trading will elevate Ethereum’s liquidity, driven by attractive yield opportunities and regulatory clarity promising further market infrastructure development. These conditions favor sustained investor confidence, supporting long-term ETH value despite short-term arbitrage activities.