Ether’s ETH$2,599.60 Rally, though impressive, leaves a lot to be desired. This is because the settlement of shorts is said to fuel for the rally, not fresh along or bullish geared bets on Chicago Mercantile Exchange (CME).

“The rally is primarily the result of short coverage – dealers relax Bearish positions – rather than a wave of bullish conviction,” SUI Chung, CEO of the Crypto Index provider CF Benchmarks, told Coindesk. CME’s derivatives, preferred by institutions, tracks CF -Benchmarks’ Bitcoin Reference Rate -New York (BRRY) variant.

When bears cover their shorts, it means they buy back futures contracts that were originally sold. This action with short coverage temporarily increases the market demand and puts upward pressure on prices.

Chung pointed to the still low CME futures premium (base) as evidence that the rally is led by short coverage.

While Ether’s spot price has risen nearly 90% to over $ 2,600 since the beginning of April sales, the annual one-month basis in CME’s Ether has kept flat between 6% and 10%, according to the data source Velo.

“In more conventional setups, we would expect increasing basic levels if dealers started fresh along by leverage,” noted Chung. “It is a reminder that not all events are driven by new demand; sometimes they reflect the relocation and risk reduction.”

One can argue that the foundation has kept steady due to sophisticated trades “Arbing” away the price difference between CME ETH futures and the spotlight price by mapping futures and buying ETH -spot -Tfs.

This argument looks weak when the US listed spot-ETFs have seen net-positive influxes in just ten trading days in the past four weeks. In addition, net inflow spoke over $ 100 million just once, according to the data source Sosovalue.

“The lack of inflow to ETF ETFs, and the muted base paints another picture, this latest trait does not appear to be driven by new geared along,” Chung said.