Ethereum Funding Rates Just Hit Levels Not Seen Since FTX Collapsed



Ethereum's derivatives market is flashing a warning to short sellers. Funding rates on Binance have fallen to a monthly average of -0.0018 — a level that hasn't been recorded for this long since November 2022, when FTX imploded and wiped out billions across the crypto sector.

That comparison alone should give traders pause. Back then, those funding conditions marked the end of a brutal bear market. Shorts who held through that period got squeezed out as the market turned.

The setup today has a similar structure, though the cause is different. ETH fell roughly 65% from its prior peak, and the broader altcoin market as measured by TOTAL2 dropped more than 51%. Since February 6, Ethereum has recovered over 30%. Yet on Binance, the majority of leveraged positions are still pointed downward.

CryptoQuant contributor Darkfost, posting on X, noted that Binance ETH open interest has added around 350,000 ETH since February — worth over $1 billion — with most of it short. Funding below -0.01% is rare. It means short sellers are continuously paying longs just to keep their positions open in a market that keeps grinding higher.

The liquidation data makes the situation even harder to ignore. More than $3 million in short positions were forced closed twice within a single hour on Binance. When that happens repeatedly, it doesn't just hurt individual traders — it adds buying pressure that can compound into a larger move.

Short squeezes feed themselves. Each liquidated short becomes a buy. Each buy pushes price into the next pocket of exposed positions. In a market this crowded on one side, the exits can get narrow fast.

Funding rates were starting to move toward positive territory at the time of the Darkfost analysis — a sign that some traders are beginning to accept the rally rather than fight it. Whether that shift holds will go a long way toward deciding whether ETH builds on its recovery or stalls out.

For more detailed analysis on this and the latest developments across crypto markets, visit CryptoNewsLive.org, where we track the derivatives signals and on-chain data that move prices before the headlines catch up. 

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