Ethereum's Downhill Slide: A Trader's Bold Bet

Ethereum's value has fallen about 10% in the last month, sparking bets against it from traders who doubt the anticipated Q4 rally.

A Big Short Bet

One trader, Taiki Maeda, has placed a $1 million short bet on Ethereum, believing the much-talked-about Q4 rally might not materialize. He argues that the market is already in a downtrend or bear market.

The Start of the Downtrend

Maeda points to a big liquidation event on Oct. 10 as the beginning of this downtrend. He suggests that many traders are still using old patterns from 2017-2021, which may not be applicable now.

Trickle-Down Dumpanomics

He describes the current situation as "trickle-down dumpanomics", meaning that as other cryptocurrencies, or altcoins, lose value, Ethereum's big valuation of $500 billion is at risk. He also notes that activity on the Ethereum network is weak.

Skepticism About Positive Stories

Maeda is not convinced by the positive stories around stablecoins and tokenization. He says these do not bring in much fee revenue for Ethereum. Instead, they benefit private companies like Robinhood, which has integrated with Arbitrum.

A Bull at Heart

Despite his bearish stance, Maeda says he is a "bull at heart". He is focused on managing risk and prefers to make money from short positions rather than taking big risks on long positions.

Optimism About Bitcoin

He remains optimistic about Bitcoin, expecting it to reach $150,000 by the end of the year. He thinks Bitcoin will not be affected by the weakness in altcoins.

Warnings About Yield Farming

Maeda also warns that returns from yield farming could decrease as retail demand fades. This could push stablecoin yields down from 25%. Additionally, selling by institutional investors, like Sequins moving BTC to Coinbase, could add more downward pressure on the market.