Short Covering, Not New Bulls, Behind Ether’s Recent Rally, Says CF Benchmarks CEO

Ether’s impressive price rally is being driven more by traders closing out bearish bets than by fresh bullish momentum, according to Sui Chung, CEO of CF Benchmarks.

Since early April, Ether (ETH) has surged nearly 90%, climbing above $2,600. But Chung told CoinDesk that this advance reflects short covering—where traders buy back futures contracts they had previously sold—rather than a wave of new long positions or leveraged buying, particularly on institutional venues like the Chicago Mercantile Exchange (CME).

“When shorts unwind, it creates a temporary spike in buying pressure,” Chung explained. “This kind of activity can push prices up without signaling a broader change in market sentiment.”

Supporting this view, CME ether futures premiums—or basis—have remained steady between 6% and 10% annualized, according to data from Velo. In typical bullish scenarios, these basis levels would rise as traders initiate fresh long positions with leverage.

Chung added that some market participants argue arbitrage strategies involving shorting futures and buying spot ETFs are keeping the basis stable. However, inflows into U.S.-listed ether ETFs have been muted, with positive net inflows on only ten trading days in the past four weeks, and just one day exceeding $100 million, based on SoSoValue data.

“This limited ETF activity, combined with steady futures premiums, points to a rally driven more by position adjustments than new buying,” Chung said.

In summary, while ether’s price jump looks strong on the surface, the underlying forces appear to be traders reducing risk by covering shorts rather than fresh bullish demand pushing the market higher.