On-chain data Ethereum It shows that funding rates have dropped to their lowest level in the last 14 months, which could pave the way for a short squeeze in the market.
Ethereum Funding Rates Reach Very Negative Values
As the analyst in a CryptoQuant post noted, ETH funding rates are currently at their lowest since July 2021.
The “funding rate” is an indicator that measures the periodic fee that investors in the Ethereum futures market are currently exchanging among each other.
When the value of the metric is negative, it means that short traders pay a premium to long traders to hold their positions. This trend generally indicates that the downtrend in the market is more dominant at the moment. In other words, it can be said that the short (bearish) positions are currently weighing too much.
Here is a chart showing the course of Ethereum funding rates over the last fifteen months:
As you can see in the chart above, Ethereum funding rates have dropped lately and are currently very negative.
The current values of the indicator stand out as the lowest level since July last year, about fourteen months ago.
At that time, these values were cryptocurrencies it caused a big short squeeze that made her rise.
In a short squeeze, an increase in the value of Ethereum when the market is overly leveraged liquidates a large amount of short traders. These liquidations push the price higher, causing more short selling. In this way, liquidations follow each other during a squeeze.
Usually, big whales move the price against “what everyone thinks” to liquidate the positions taken. And this results in major purges.
In summary, the current situation may trigger a serious instant rise in Ethereum.
*Not investment advice.
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