A research firm has advised its clients to hedge their bullish bitcoin BTC$109,095.62 positions by taking short positions in ether ETH$3,828.32, the native token of the Ethereum blockchain, diverging from the broadly optimistic forecasts for a year-end ETH rally.

"Our altcoin model continues to favor short ETH versus long BTC," Markus Thielen, founder of 10x Research, said in a client note Friday.

Shorting ether could be a good hedge primarily because the ETH digital asset treasury (DAT) outlook appears relatively weak.

Thielen explained that the issuance of new shares by Bitmine Immersion Technologies, a major ether buyer this year, has slowed since September as retail demand has significantly declined. With limited options to raise additional capital, Bitmine’s capacity to purchase more ETH is now constrained.

As a result, "if Bitmine is tapped out, so is Ethereum’s upside, at least for now," Thielen said.

He noted the anti-ether bias in the Deribit-listed options as another sign of investor aversion to ether. According to Per Thielen, traders are increasingly buying put options on ether, signaling growing downside concerns. In contrast, bitcoin’s options open interest has surged to a record high of over $50 billion, driven mainly by demand for upside exposure via calls.

Lastly, data from Google searches indicates a shrinking pool of incremental Ether buyers, making it vulnerable to price weakness, he argued.

Taken together, these factors suggest that ether could take a bigger hit in case bitcoin breaks out of its multi-month sideways trading pattern above $100,000.

"A straightforward long-BTC/short-ETH positioning remains attractive in this environment and should continue to provide protection — even if Bitcoin ultimately breaks its triangle to the downside," Thielen noted.

As of writing, ether changed hands at $3,815, down over 3% in 24 hours. Bitcoin traded at $108,820, down nearly 2%, according to CoinDesk data.