Hedge Funds are at the second highest short level ever.

Why? 3 potential reasons:

Hedge funds might short ETH if they expect a broader downturn in the cryptocurrency market.

Ethereum faces competition from other blockchain platforms, such as Solana.

In some cases, hedge funds may short ETH with the intention of influencing market prices downward, creating panic selling, and then covering their shorts at a lower price.

PS Hedge Funds don't always get it right.