Trader 0xFa5D Flips to Short Position on ETH After $3.55 Million Loss

A prominent trader, identified as 0xFa5D, recently made a significant move in the Ethereum market. After exiting a large long position in Ethereum ($ETH) with a loss of $3.55 million, the trader deposited $15.66 million USDC into Hyperliquid. Just two hours later, the trader flipped to a short position on ETH with 10x leverage. This bold move indicates a high level of conviction despite the earlier loss, reflecting the intense volatility currently present in the Ethereum market. This action comes at a time when institutional investors, particularly hedge funds, are increasing their bearish bets on Ethereum.

Hedge funds have been accumulating leveraged short positions on Ethereum for the past four years. The sharp increase in short positions occurred as Ethereum's price dropped from $4,800 in late 2021 to below $1,000 in 2022. Despite Ethereum's price recovery to above $4,000 by mid-2024, hedge funds maintained their pessimistic outlook. Throughout late 2024, Ethereum's price dropped from $4,000 to nearly $2,000, leading to a further increase in short exposure, reaching levels above $200,000. Even as Ethereum recovered above $3,000 in early 2025, short positions remained elevated, indicating a potential short squeeze if the price continues to rise.

Technical indicators suggest a bullish setup for Ethereum. Since March 2025, Ethereum has been forming an ascending triangle pattern, with higher lows at $1,800, $2,000, and $2,200, and several tests of the resistance level at $2,700. The Moving Average Convergence Divergence (MACD) indicator shows two bullish crossovers, one in late June and one in April, both of which led to significant recoveries. These technical signals suggest that buyers are currently in control of the market. If Ethereum breaks above the $2,700 resistance level, the potential upward targets range from $3,800 to $4,200. The stair-step pattern reflects past bullish breakout activity, and Ethereum maintaining above the rising trendline indicates potential gains.

In summary, the recent actions of trader 0xFa5D and the continued bearish bets by hedge funds highlight the current volatility and uncertainty in the Ethereum market. However, technical indicators suggest a bullish outlook, with the potential for significant price increases if Ethereum can break above key resistance levels. The market remains dynamic, with both bearish and bullish forces at play, making it a critical time for investors to closely monitor developments and make informed decisions.