Ethereum’s price surge above $2,670 triggered a significant $500 million short squeeze, primarily impacting leveraged bearish traders on Binance. This event underscores intense market volatility and highlights the vulnerability of traders holding crowded leveraged positions against the asset.
The squeeze rapidly reversed bearish momentum, pushing funding rates into positive territory. This shift reflects a change in trader sentiment towards cautious optimism, as evidenced by stabilized open interest.
Heightened inflows of ETH into derivatives exchanges and these shifting funding rates indicate traders are aggressively repositioning. This activity suggests the potential for further significant price swings in the near term.
While positive funding rates point to tentative bullishness, persistently elevated leverage levels combined with ongoing derivative inflows present a substantial risk. These factors could easily reignite market turbulence despite the recent liquidation event.