Vitalik Buterin Issues Warning as Ethereum Price Hits All-Time High

Ethereum price has been unstoppable, smashing through $4,956 to set a fresh all-time high. Yet despite this surge, the broader crypto market has cooled off, slipping into “Neutral” territory on the Fear & Greed Index at 50, signaling a more cautious mood among traders. On-chain data suggests Ethereum is at a “boiling point,” with heightened speculative activity driving momentum. But amid the excitement, co-founder Vitalik Buterin has raised concerns over prediction markets, warning they remain flawed as proper hedging tools.

Buterin on the Core Weakness

In a recent post, Buterin explained that prediction markets, where users bet on outcomes ranging from elections to sports, lack the design and depth needed to function like traditional hedging instruments. Unlike futures tied to the S&P 500 or Treasuries, these platforms don’t pay interest, lack liquidity, and attract mostly speculators rather than hedgers.

He highlighted that most users are unwilling to give up stable 4% APY returns on dollar-pegged assets just to lock funds into platforms like Polymarket, which currently offer no yield. Without incentives, serious risk managers stay away. Buterin believes that once yield integration becomes standard, prediction markets could finally see real growth and attract diverse participants.

Hedging in Focus as ETH Climbs

Ethereum’s near-$5,000 rally has only intensified the discussion around hedging. With profits at risk, traders are eyeing options to secure gains, but the current market lacks robust tools. Buterin argued that while traditional finance thrives on standardized contracts and deep liquidity, crypto’s prediction markets are still speculation-heavy, failing to provide the reliability of established instruments.

Platforms like Polymarket and Kalshi continue to expand, with Kalshi hitting a $2 billion valuation, but regulatory scrutiny from the SEC and CFTC looms. For now, the sector is growing in attention but not in hedging credibility.

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Analysts Weigh In

Market voices are split on Ethereum’s next moves. Daan Crypto Trades noted that while ETH surged, most altcoins stayed flat or dropped 10–30%, proving that coin selection remains key. Meanwhile, EGRAG CRYPTO warned of a looming CME gap for Ethereum between $2,855 and $2,925, suggesting it may fill in the next bear market, potentially inflicting heavy losses on altcoin holders if it happens sooner.

On the bullish side, Arthur Hayes has set an ambitious $20,000 target for ETH this cycle, while institutional players like Tom Lee’s BitMine have already piled in with $45 million worth of ETH.

Ethereum’s breakout highlights the strength of its rally, but Buterin’s warning underscores a key gap in crypto’s financial infrastructure. As ETH soars, the lack of robust hedging tools could become even more pressing, leaving traders to juggle between bullish optimism and the structural risks Buterin has spotlighted.

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