10x Research analysts have flagged Ethereum (ETH) as a potential tactical short, suggesting it could serve as a hedge against exposure to Bitcoin (BTC), particularly as institutional capital continues to favor BTC over other digital assets. The firm argues that Ethereum is displaying growing structural vulnerabilities, while Bitcoin solidifies its dominance in attracting large-scale investment from corporate treasuries.
According to the recent 10x Research report, Ethereum’s treasury model is beginning to show signs of strain. While some ETH-focused companies maintain a positive long-term outlook, their capital reserves are dwindling, limiting their ability to support the asset’s price during market downturns. This dynamic, combined with weakening technical signals and declining institutional interest in ETH, positions Ethereum as a viable short for investors who want to offset their Bitcoin risk.
The report emphasizes that Bitcoin remains the top choice for institutional investors, primarily due to its perceived stability and liquidity. In contrast, Ethereum has been largely driven by a narrative that promotes its use in digital asset treasuries. The model typically involves institutions acquiring ETH at base value and later distributing it to retail investors at a premium, creating a self-reinforcing price loop. However, this mechanism now appears to be faltering due to reduced transparency in private investment in public equity (PIPE) transactions and inconsistent capital flows.
BitMine, one of the largest holders of ETH among treasury firms, was highlighted as a critical example. The report alleges that BitMine’s strategy allowed institutions to accumulate ETH at favorable terms and offload it to retail markets, artificially sustaining upward price pressure. With BitMine holding approximately 3.3 million ETH — the majority share among the 15 Ether-centric treasury companies that collectively own 4.7 million ETH — its influence on the market is substantial.
SharpLink and Bit Digital, the second- and third-largest holders, possess 859,853 ETH and 150,244 ETH respectively. Despite this concentration of ETH in a few hands, the broader market sentiment has shifted toward caution. The October 10 market crash, which led to a staggering $19 billion in crypto liquidations — the largest single-day wipeout on record — has contributed to waning confidence and increased volatility across the sector.
Technically, Ethereum is facing considerable pressure. 10x Research points to a failed breakout from a multi-year wedge pattern and a bearish signal from weekly stochastics, indicating that the asset may have reached a local top. If ETH fails to hold support at the $3,000 mark, analysts warn a further drop to around $2,700 could be imminent.
Despite these warning signs, optimism persists in some corners. Tom Lee, chairman of BitMine, remains bullish on Ethereum’s long-term trajectory. In recent comments, he reaffirmed his belief that ETH could reach $10,000 by the end of the year, citing the asset’s consistent base-building efforts since 2021. Lee’s stance contrasts sharply with the increasingly defensive tone of institutional investors and analysts, further highlighting the divergence in market outlooks.
Adding to Ethereum’s headwinds is the cooling demand for Ether-based spot ETFs, particularly in the U.S. This decline in investor appetite has dampened hopes for large-scale inflows and further exacerbated concerns about ETH’s near-term performance.
Looking beyond the current market turbulence, some analysts believe Ethereum still holds long-term value due to its smart contract capabilities, role in DeFi, and ongoing development upgrades. However, in the context of short- to medium-term portfolio management, 10x Research contends that shorting ETH may be a prudent strategy for investors seeking to hedge against Bitcoin’s dominance and mitigate risk during periods of uncertainty.
In parallel, Ethereum’s upcoming network upgrades, including scalability improvements and changes to its consensus mechanism, could alter the investment landscape in the future. But for now, those developments remain largely speculative and may not provide immediate relief to price pressure.
Another factor influencing investor decision-making is the ongoing comparison between Ethereum and Bitcoin as stores of value. While Bitcoin continues to be viewed as “digital gold,” Ethereum’s broader utility does not necessarily translate into the same level of confidence during market stress. This distinction is becoming more pronounced as capital reallocates toward perceived safety.
Moreover, the concentration of ETH holdings among a few large treasury firms raises concerns about centralization and liquidity risk. If one or more of these firms were to divest substantial holdings under pressure, it could trigger sharp price declines, amplifying volatility and reducing investor confidence further.
For traders and institutional players, the evolving narrative around Ethereum may necessitate a recalibration of strategies. Hedging against ETH could offer a temporary buffer in portfolios heavily weighted toward digital assets, particularly as macroeconomic uncertainty and regulatory developments continue to shape market sentiment.
In conclusion, while Ethereum remains a foundational layer of the blockchain ecosystem, its current positioning in institutional portfolios is under scrutiny. As Bitcoin consolidates its role as the premier institutional asset, Ethereum’s structural fragilities and market dynamics present both risks and opportunities — making it a complex, yet potentially strategic, instrument for hedging within the broader crypto space.