Currently, there is a serious divergence between bulls and bears. I have made a hedging trade, going long on ETH and shorting a basket of altcoins, with a position approximately 1:1. I would like to discuss and share my thoughts with everyone.

My logic is that ETH is the engine of this round of increase that started at the end of June, with two main driving forces: first, institutions emulating MicroStrategy by purchasing ETH through stock and cryptocurrency financing; second, the stablecoin narrative, where ETH is the core infrastructure and settlement layer involved.

Referring to MicroStrategy's previous purchase of BTC, which drove the price up, most altcoins ended up far behind Bitcoin. The funds that stocks and institutions use to buy ETH are also unlikely to spill over into other altcoins.

According to data from CMC, in the past 30 days, only 20 of the Top 200 tokens have increased more than ETH, including Bonk, Zora, CFX, ENA, which are clearly driven by favorable events.

In terms of altcoin selection, following the logic of previous short positions, I prioritize those with relatively high market caps, non-leading tokens, weak performance, and low presence, while diversifying shorts and setting stop-loss orders to prevent a single asset from surging.

If the market continues to go bullish in the second half of the year, I believe there is a high probability that it will still be driven by ETH. If it goes bearish, I also don't think altcoins can stand alone, while ETH at least has institutional buying power to support it. The scenarios that could lead to this hedging strategy becoming ineffective are either the arrival of an altcoin season where most altcoins consistently outperform ETH, or ETH experiencing fluctuations or leading declines, while other altcoins don't drop much. Based on my experience in the past few months, I believe this likelihood is quite low.