Key Takeaways
- •10x Research recommends shorting Ethereum (ETH) to hedge long Bitcoin (BTC) positions.
- •The firm cites declining sentiment and weak demand for ETH, contrasting with strong institutional interest in BTC.
- •Institutional investment in Bitcoin has surged, with options open interest reaching $50 billion.
10x Research's Strategic Recommendation
10x Research, led by founder Markus Thielen, has issued a significant trading recommendation suggesting investors hedge their long Bitcoin (BTC) positions by shorting Ethereum (ETH). This strategy is based on observations of weak demand and capital flow for ETH, which stands in contrast to the robust institutional buy-ins currently benefiting Bitcoin.
This tactical recommendation carries considerable weight within the cryptocurrency market. It reflects a specific bearish stance on Ethereum while maintaining a bullish or neutral outlook on Bitcoin. The potential impact of this advice extends beyond ETH and BTC, potentially influencing the broader sector of Layer 1 and Layer 2 altcoins.
Expert Market Analysis and Ethereum's Challenges
In a note to clients, Markus Thielen articulated, "Our altcoin model continues to favor short ETH versus long BTC." He further explained that shorting Ethereum could serve as an effective hedge due to its perceived weak digital asset treasury outlook.
A key factor contributing to this analysis is the reported slowdown in new share issuance by Bitmine Immersion Technologies, a notable buyer of ETH, since September. This reduction in activity curtails a significant channel for ETH acquisition. Thielen highlighted this constraint, stating, "With limited options to raise additional capital, Bitmine’s capacity to purchase more ETH is now constrained."
Institutional Movements and Shifting Market Sentiment
The recommendation from 10x Research is underscored by a discernible investor aversion towards Ethereum, evidenced by a notable rise in ETH put options. Concurrently, Bitcoin options have experienced a surge, reaching an open interest record of $50 billion, largely driven by bullish BTC calls. This trend aligns with a general lack of retail enthusiasm for Ethereum.
Further reinforcing the institutional focus on Bitcoin, spot BTC ETFs have accumulated $54.97 billion in assets for 2025. This significant inflow underscores Bitcoin's growing appeal to large-scale investors. VanEck's forecast of Bitcoin reaching $180,000 by 2025 further emphasizes its positive institutional outlook.
Impact on Ethereum and Associated Altcoins
Ethereum faces direct repercussions from increased shorting pressure, a weakening digital asset treasury, and declining market sentiment. In contrast, Bitcoin continues to benefit from strong ETF inflows and sustained institutional interest.
Altcoins closely associated with Ethereum, particularly smaller Layer 1 and Layer 2 tokens, may experience collateral impact. This could manifest as sector rotation and potential capital outflows from Ethereum-related decentralized finance (DeFi) projects.
Related Cryptocurrencies and Investment Strategies
The immediate cryptocurrencies affected by this recommendation are Ethereum and Bitcoin. Indirectly, other altcoins such as Solana and Avalanche, along with L2 rollups like Arbitrum and Optimism, may also be impacted. Additionally, DeFi assets, including governance tokens for platforms like Aave and Uniswap, could follow Ethereum's market trajectory.
In terms of investment strategy, Thielen's advice suggests a move towards reducing exposure to Ethereum. This approach aligns investments with the current institutional preference for Bitcoin. The recommendation emphasizes strategically tethering investments to Bitcoin's institutional momentum, potentially serving as a measure to safeguard assets amidst Ethereum's current market volatility.