According to a report from CoinDesk dated May 16th, Sui Chung, CEO of crypto index provider CF Benchmarks, shared insights on the recent fluctuations in Ethereum’s price. He emphasized that the surge is primarily attributed to short covering—a tactic where traders rectify their bearish positions—rather than overwhelming bullish sentiment in the crypto market. This process involves short sellers repurchasing futures contracts, which elevates immediate demand and subsequently leads to increased prices.
Chung further remarked on the status of the CME Bitcoin futures market, noting that the premium (or basis) remains at a notably low level. This suggests that the recent price rally is predominantly influenced by short covering activities. He stressed that in typical market conditions, a rise in leverage for new long positions would generally lead to an uptick in the basis. This observation serves as a reminder that price increases can sometimes stem from strategic position adjustments rather than genuine market demand.