Earned $580,000, Double Down on $1M ETH Short Position—Then Harvest the Market

I started with a simple question: Who are the real buyers and sellers in the crypto market today? And the answer changed my entire understanding of Ethereum’s future.

The Setup: Why I’m Shorting ETH Again

In the past two months, I hit a milestone—earning over $500,000 from shorting ETH and altcoins at market peaks. The strategy is simple but effective: identify when the market hits a top, and short before it drops.

Now, I’ve reopened a short position at an average entry price of $3,133, with $1 million worth. Unrealized profit has already reached $56,000 in just a few weeks. This isn’t luck—it’s a deliberate analysis of market mechanics.

Three weeks ago, I closed a short when ETH fell to $2,650. But after the rebound, I immediately opened a new short. Why? Because ETH’s price shouldn’t be at this level based on fundamentals. The only thing supporting it is a buyer—and when that buyer gives way, everything will fall.

The Real Issue: No Structural Buyer in the Market

I’ve been trading long enough to know a critical truth: In today’s crypto market, you need to ask who the marginal buyer and marginal seller are. In October, I asked this in the community. Everyone expected a Q4 rally and “altcoin season.” But when I asked, “If everyone is waiting for a rally, who will stand as the marginal buyer?”—there was no clear answer.

That’s when I realized the truth: they are actually the marginal sellers. So, it’s a perfect opportunity to short.

The current situation is clearer now. The crypto market is like a PvP (player versus player) game. There’s no true “structural buyer” for the long term. Digital asset treasury companies (DATs) have money, yes, but their funds are limited. If you understand this, all the price movements of the past month become transparent.

For example:

• When Tom Lee spends large sums on ETH, you can sell
• When you see his buying momentum weakening, start shorting
• When he stops, you should anticipate a crash

The $4B Question: Tom Lee and the Incentive Structure

To understand ETH’s current price, you need to carefully examine who is making the market—and especially, what their incentives are.

Tom Lee allocates almost $300 million weekly to buy ETH using Bitmine’s funds. In a short period, he pushed the price from $2,500 to $4,900. But this is where deeper analysis begins:

Tom Lee’s compensation structure isn’t just a simple salary. According to SEC filings of Bitmine:

• Performance bonuses are tied to Bitcoin revenue, ETH holding ratio, Bitcoin price, and market cap
• Each year, he can receive $5M up to $15M cash bonus if approved by the board
• When Bitmine’s ETH holdings reach 4%: 500,000 shares ($15M–$20M value)
• At 5%: 1 million shares (double the reward)

The math is straightforward. Tom Lee wants to reach 4-5% market share before year-end, because that’s when he gets an instant equity reward. The deadline? January 15, 2026—the board meeting where results must be shown.

That’s why he’s accelerating purchases before the year ends. It’s not about “fair value” or “long-term vision”—it’s about aligned incentives.

If You Know the History, You Know the Future

Let’s leverage the last cycle as a template. When Bitcoin last traded at $85,000, ETH was at $1,600. Now, at roughly the same Bitcoin level, ETH is in the $2,900–$4,900 range.

Question: Why is ETH higher relative to Bitcoin now than before?

Answer: Because of Tom Lee. Nothing else.

I believe the true fair value of ETH is in the $1,200–$2,200 range. This price is based on on-chain fundamentals, adoption metrics, and long-term utility—not sentiment or short-term fund flows.

My usual approach:

• Previously, I thought ETH’s target was $10,000 and held it for years
• From $4,000, it dropped to $900
• That experience taught me that technology cannot be valued solely by the asset’s price

The Mechanics: Why There’s No Exit Liquidity

Here’s a critical insight: Every time ETH’s price rises, OG holders exit by selling. ETH is used as an exit liquidity tool, not a long-term holding asset.

Saylor pushed Bitcoin from $10,000 to $85,000 over 5 years—that’s real conviction buying. ROI was 8.5x.

Tom Lee pushed ETH from $2,500 to $2,900 in just 5 months—that’s 1.16x. While he’s buying over $3B+ worth of ETH, the price appreciation is minimal. Where did the money go? Into selling pressure from existing holders.

This is a fundamental insight: There’s no organic demand for ETH at this level. The price is artificially supported by a single buyer. When he leaves, only gravity will pull the price down.

The Critical Date: January 15, 2026

Three events could be catastrophic on January 15, 2026:

1. Bitmine Board Bonus Decision – Tom Lee must present results. If his Q4 buying spree is successful, he’ll receive multi-million dollar equity rewards
2. Potential MSTR Delisting – The deadline to avoid MicroStrategy’s delisting. If it happens, billions in outflows will leave the ecosystem
3. End of Incentive Cycle – When the target (4-5% ETH market share) is reached, Tom Lee’s motivation will significantly decrease

This is a perfect storm scenario. If MSTR gets delisted and Tom Lee’s funds dry up, ETH’s price could crash 30-50%.

The On-Chain Reality Check

I rely on data, not guesses.

On-chain metrics are clear:

• Almost no organic usage of ETH as a medium of exchange or settlement layer
• Layer 2 activity is growing, but it doesn’t provide fundamental value to the base layer token
• TVL in DeFi is seasonal and driven by yield farming hype

Many people fail to separate “good technology” from “profitable investment.” Robinhood uses Arbitrum for its own blockchain, but that doesn’t benefit ARB token holders. Market maturity is realizing that: even great tech doesn’t guarantee higher prices.

The Strategy: Timing Over Hodling

I short ETH because I know the cycle is about to peak. This isn’t bearish dogmatism—it’s a mechanical reading of market structure.

My trading approach is simple:

1. Identify the marginal buyer (Tom Lee with $1B+ annual dry powder)
2. Track the incentive deadline (January 15)
3. Anticipate the unwind (When the buyer leaves, exit all longs)
4. Position accordingly (Short before it happens)

Even if prices sometimes rise due to random factors, the long-term trajectory is clear. This year, shorting ETH is a straightforward trade based on fundamentals.

The Takeaway

The crypto market has evolved from “everyone wins” to “zero-sum game.” There’s no structural buyer supporting ETH forever. Real wealth isn’t made from altcoin rallies—it’s accumulated by buying low and selling at the peak.

When Tom Lee’s funds run out or he pivots to different assets, ETH’s price will revert to its fair value. Based on mechanics and incentives, I expect this to happen in Q1 2026.

The real opportunity isn’t holding ETH—it’s shorting while buyers still have money, and going long on the subsequent dip to $1,500–$2,000.