Analyst: Ethereum's recent rebound is driven by short covering, not entirely by new demand
On May 16th, according to CoinDesk, Sui Chung, CEO of cryptocurrency index provider CF Benchmarks, stated in an interview that "the recent rise in Ethereum is mainly due to short covering - traders releasing bearish positions - rather than strong long beliefs in the market In the process of short covering, short sellers will repurchase the futures contracts they previously sold. This operation will increase market demand in the short term, thereby putting upward pressure on prices. Chung pointed out that the premium (also known as basis) of CME Bitcoin futures is still at a relatively low level, which indicates that this round of rise is mainly driven by short covering. Chung added, "In more typical market situations, if traders start using leverage to establish new long positions, we usually see an increase in basis levels. This phenomenon reminds us that not all upward trends are driven by new demand, and sometimes only reflect position adjustments and risk reduction