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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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shazow
@shazow.eth
That's interesting, thanks for sharing! Also the point about the stabilizing effect happening on the way down, too. I also know there's a ton of private funds that aim to be market neutral or get exposure to crypto volatility, these also rely heavily on shorting for hedging. When I think of buy/sell pressure, I think of longer-term systemic mechanisms (e.g. issuance/yield, burn, gas costs/demand, gadgets like ethena, CDP tokens, etc). I think that's separate from "market vibes" (bunch of people want to sell vs buy at any given time). I wonder if we're ignoring these systemic mechanisms and overattributing to market vibes (and downstream overattributing to "why won't the EF do marketing" lol). There might be a mechanism solution to systemic pressures, though! (Like EIP1559 was a huge lever to reduce sell pressure.)
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matthewb.eth
@matthewb
there’s definitely some column A column B, but also ETHBTC is a straight line down for 3 entire years. that’s a long, long time. while SOL has gone from $8 to $275 and BTC $16k to $108k, ETH has only pulled a little over 3x from $1000 to $3300. that’s pretty remarkable underperformance, especially given the ETF approval.
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