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A leading crypto research firm, 10x Research, has advised investors to hedge their bullish Bitcoin (BTC) positions by taking short positions on Ethereum (ETH). The firm’s latest analysis highlights several on-chain and market indicators showing relative weakness in Ether compared to Bitcoin, suggesting a more defensive approach could benefit traders in the current market.
According to Markus Thielen, founder of 10x Research, Bitcoin continues to demonstrate stronger institutional demand and market resilience, while Ethereum is struggling to attract new capital and maintain buying pressure.
“Our altcoin model continues to favor short ETH versus long BTC,” Thielen wrote in his client note published Friday.
Weak Demand Signals Trouble for Ethereum
One of the key factors influencing this bearish outlook for ETH is the slowdown in demand from Bitmine Immersion Technologies, one of the year’s most significant Ethereum buyers. The company had been a major driver of Ether purchases through its digital asset treasury (DAT) strategy, but Thielen noted that new share issuance by Bitmine has slowed sharply since September.
This decline in retail and institutional participation limits Bitmine’s ability to raise fresh capital, reducing the firm’s purchasing power in the Ethereum market.
Thielen explained that this lack of liquidity could weigh heavily on ETH’s short-term performance:
“If Bitmine is tapped out, so is Ethereum’s upside, at least for now.”
Options Market Shows Growing Bearish Sentiment
Data from the Deribit options exchange further supports the bearish sentiment toward Ethereum. Thielen highlighted that traders are increasingly purchasing put options on ETH — contracts that profit when the price falls — suggesting that investors expect continued downside.
By contrast, Bitcoin’s options market has surged in bullish activity. Open interest for BTC options recently climbed to a record $50 billion, mostly driven by demand for call options that bet on further price appreciation.
This divergence between the two largest cryptocurrencies reflects a clear shift in investor preference toward Bitcoin, which continues to attract more capital inflows and institutional interest.
Google Trends Reflect Weak Retail Interest
Beyond institutional activity, 10x Research also pointed to a decline in Google search trends for Ethereum-related terms, indicating waning retail engagement. Historically, surges in online interest have correlated with price rallies in crypto markets. The current decline, therefore, signals a shrinking pool of new ETH buyers, further limiting the potential for upward momentum.
The firm believes that without renewed retail enthusiasm or institutional inflows, Ethereum’s price may remain under pressure — particularly if Bitcoin breaks out of its current consolidation phase above $100,000.
Bitcoin’s Position Strengthens Amid Institutional Demand
While Ethereum struggles, Bitcoin continues to attract strong institutional and treasury demand. Several on-chain metrics suggest that long-term holders and funds are adding BTC exposure, reinforcing its position as the market’s leading digital asset.
Thielen noted that this environment makes a long Bitcoin and short Ether strategy an appealing hedge. Such positioning allows traders to benefit from Bitcoin’s potential upside while protecting against losses if Ethereum weakens further.
“A straightforward long-BTC/short-ETH positioning remains attractive in this environment,” he wrote, “and should continue to provide protection even if Bitcoin ultimately breaks its triangle to the downside.”
Ethereum Faces Challenges Despite Long-Term Optimism
Despite the near-term weakness, analysts remain optimistic about Ethereum’s long-term fundamentals, particularly its role in decentralized finance (DeFi) and tokenization. However, the current market dynamics—limited new capital, cautious investor sentiment, and strong competition from Bitcoin—suggest that ETH could underperform in the short run.
Thielen’s analysis underscores that while Ethereum’s network activity remains robust, price movements are more heavily influenced by liquidity and sentiment cycles. Without renewed investor enthusiasm, Ethereum may continue lagging behind Bitcoin in the fourth quarter.
Market Overview
As of the latest data, Ether traded around $3,815, marking a 3% decline in the past 24 hours, while Bitcoin hovered near $108,820, down about 2%, according to CoinDesk. The broader crypto market remains relatively stable but shows signs of divergence between major assets.
With institutional investors increasing Bitcoin exposure and retail participation in Ethereum slowing, 10x Research’s hedge recommendation could serve as a tactical strategy for traders seeking risk-adjusted returns in a volatile market.
