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shazow
@shazow.eth
I saw a take that one reason $ETH price is suppressed is because it's the primary target for hedging via shorts: 1. $ETH has by far the most liquidity against stables, especially on defi/dex 2. If the crypto market crashes, $ETH is very likely going down with it So whales can ape positions into whatever tokens ($BTC, $SOL, whatever) and hedge their positions by shorting $ETH. If this turns out to be true, and it's responsible for holding down the price, what should we be doing differently? Is there something that "the devs" should do about this? Kind of a curse of being the best at something while also correlated with a bunch of other assets.
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matthewb.eth
@matthewb
yes, but the reason that strategy is so consistently effective is precisely because there is less buy pressure on ETH. it sells off more on downturns vs. BTC and SOL, and doesn’t get bought up as fast. I read some analysis that argued that Ethena was a factor in this, but I also think there is some supply overhang from 2021 round trippers (imo).
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shazow
@shazow.eth
How do you measure buy pressure independently of sell pressure? Would be curious to read more about the Ethena thing if you stumble on it!
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matthewb.eth
@matthewb
I'm sure there are technical ways to analyze this but basically ETH drops like a stone and is slow to bounce (or doesn't), contrast that to BTC where dips are usually eaten up quickly. re: Ethena, pretty compelling imo: https://x.com/MrBenLilly/status/1875640368445997379
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Cooki
@cooki
But Ethena is delta nuetral though so I don't really see how this could work. The whole idea is that you remain as long as you do short, and just collect the funding rates from those that prefer to be long on leverage. Unless I'm missing something this shouldn't impact price negatively (or positively).
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shazow
@shazow.eth
I'm not super familiar with how Ethena works (aside from the recent Chopping Block podcast with Guy Young), but wouldn't the short/long positions be asymmetric depending on the direction of the market?
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