Short Positions on Ethereum Reach All-Time High on Bitfinex

Ether’s price held near 12-month lows on Saturday, just one day after bets against the virtual currency spiked to all-time highs on Bitfinex.

ETH/USD Price Update

Ethereum traded within a narrow range on Saturday and was last seen hovering near $216.00 on Bitfinex. The digital currency is considered severely oversold according to the relative strength index (RSI).

The ether price has declined 25% over the past week and is down a staggering 40% compared with 30 days ago, according to Ethlorer.io. At current values, ether has a total market capitalization of $22 billion. Daily trade volumes in ETH amounted to $1.3 billion.

Losses have extended far beyond ether to include ERC-20 tokens, which represent a large contingency of digital assets. Among the top-20 ERC-20 tokens, 18 have reported double-digit losses over the past seven days.

At the time of writing, the combined value of all digital currencies in circulation was $202.8 billion, little changed from the previous close. Overall trade volumes were just under $10.3 billion, according to CoinMarketCap.

Short Positions Rise

The number of bets placed against Ethereum surged to all-time highs on Friday, with Bitfinex reporting a total of 208,689 short positions. That surpassed the previous record of around 203,000. Bitfinex is the fifth largest digital currency exchange based on adjusted 30-day volume, according to CoinMarketCap.

The rout of Ethereum has been accompanied by a rapid selloff of ERC-20 tokens, fueling concerns that initial coin offerings (ICOs) are cashing out. ICOs using the Ethereum blockchain are considered one of the main catalysts for ether’s record-setting rally last year. Now, they are being blamed for its decline. While ICO cash-outs are part of the problem, crypto startups simply haven’t sold enough ether to justify the coin’s recent declines. This is further corroborated by the latest compilation of ETH Spend data courtesy of Santiment.

Bitcoin’s rising star in the eyes of remaining crypto traders has also negatively influenced ether’s price. Bitcoin now represents nearly 55% of the entire cryptocurrency market capitalization, the highest since December. As Hacked previously reported, traders appear to be disavowing alternative assets for the perceived safety and stability of BTC.

Ether has also been disproportionately affected by negative speculation concerning scalability and economic abstraction. This came to a head earlier this month when Jeremy Rubin, an influential cryptcocurrency entrepreneur, penned a TechCrunch article arguing that Ethereum’s days are numbered.

The core of Rubin’s argument is that ether will eventually become obsolete because smart contract fees on the Ethereum protocol are paid through ERC-20 tokens instead of ETH. According to Vitalik Buterin, Ethereum’s founder, this problem is being addressed by new proposals that make gas payments in ETH mandatory.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi