Shorting Ether Could Hedge Bitcoin, Says 10x Research

In a recent note, 10x Research has advised crypto investors to consider shorting Ether (ETH) as a potential hedge against Bitcoin (BTC). This recommendation comes amid growing concerns about Ethereum’s long-term viability and its diminishing appeal to institutional investors.

The research firm highlighted that while Bitcoin continues to attract attention and capital, Ethereum is facing a set of structural risks that could impact its performance. These include issues related to network scalability, high gas fees, and a complex roadmap following its transition to proof-of-stake.

By shorting ETH, investors could protect their Bitcoin holdings from broader market volatility, especially if Ethereum underperforms relative to BTC.

Structural Risks Could Weigh on ETH Price

Ethereum has been under scrutiny recently for its inability to maintain dominance in the smart contract space. While it still leads in DeFi and NFTs, other blockchains like Solana, Avalanche, and Base are gaining traction.

Moreover, concerns over centralization, validator incentives, and regulatory ambiguity surrounding ETH’s classification as a security are compounding the risks. These factors have made ETH a less attractive bet for institutions, according to 10x Research.

Institutional Demand Is Cooling Off

10x Research also noted a weakening in institutional demand for Ether. This is evident in declining ETH inflows into exchange-traded products and a shift in focus toward Bitcoin-related financial instruments, especially with growing speculation about a spot Bitcoin ETF.

The report suggests that if Ethereum continues to lose favor, it may underperform in a bullish market, making it a viable asset to short in hedge strategies.

While the suggestion to short Ether may not sit well with ETH bulls, it reflects a strategic outlook for diversified portfolios in a rapidly shifting market landscape.