On-chain data shows the Ethereum funding rates have now declined to the lowest value in 14 months, something that could pave way for a short squeeze in the market.<\/p>\n
Ethereum Funding Rates Reach Highly Negative Value<\/p>\n
As pointed out by an analyst in a CryptoQuant post<\/a>, the ETH funding rates are currently at their least value since July 2021.<\/p>\n The \u201cfunding rate<\/a>\u201d is an indicator that measures the periodic fee that traders in the Ethereum futures market are exchanging between each other right now.<\/p>\n When the value of the metric is negative, it means short traders are paying a premium to the long traders in order to hold onto their positions. This trend generally hints that a bearish sentiment is more dominant in the market currently.<\/p>\n On the other hand, positive values of the indicator imply longs are overwhelming the shorts at the moment. Naturally, such a trend suggests the majority sentiment is bullish.<\/p>\n Now, here is a chart that shows the trend in the Ethereum funding rates over the past fifteen months or so:<\/p>\n\n Looks like the value of the metric has been a deep red in recent days | Source: CryptoQuant<\/a><\/p>\n As you can see in the above graph, the Ethereum funding rates have declined recently, and have now hit highly negative values.<\/p>\n The indicator\u2019s current values are the lowest they have been since the July of last year, around fourteen months ago.<\/p>\n Back then, these values lead to a big short squeeze<\/a> taking place in the market that pumped the price of the crypto up.<\/p>\n In a short squeeze, a swing up in the value of Ethereum while the market is overleveraged liquidates a large amount of shorts. These liquidations push the price up even higher, leading to more shorts being flushed down. In this way, liquidations cascade together during a squeeze.<\/p>\n Related Reading: Ethereum Price Plummets 9% As Fed Chair Passes Hawkish Remarks<\/a><\/p>\n Generally, highly positive funding rates can lead to long squeezes (since there are more longs in the market), while negative ones may result in shorts getting squeezed.<\/p>\n If the same trend as 14 months ago repeats this time as well, then it\u2019s possible Ethereum could reverse using a short squeeze this time as well.<\/p>\n ETH Price<\/p>\n At the time of writing, Ethereum\u2019s price<\/a> floats around $1.4k, down 7% in the last seven days. Over the past month, the crypto has lost 10% in value.<\/p>\n The below chart shows the trend in the price of the coin over the last five days.<\/p>\n\n The value of the crypto seems to have plummeted down over the last couple of days| Source: ETHUSD on TradingView<\/a> <\/p>\n On-chain data shows the Ethereum funding rates have now declined to the lowest value in 14 months, something that could pave way for a short squeeze in the market.<\/p>\n Ethereum Funding Rates Reach Highly Negative Value<\/p>\n As pointed out by an analyst in a CryptoQuant post<\/a>, the ETH funding rates are currently at their least value since July 2021.<\/p>\n The \u201cfunding rate<\/a>\u201d is an indicator that measures the periodic fee that traders in the Ethereum futures market are exchanging between each other right now.<\/p>\n When the value of the metric is negative, it means short traders are paying a premium to the long traders in order to hold onto their positions. This trend generally hints that a bearish sentiment is more dominant in the market currently.<\/p>\n On the other hand, positive values of the indicator imply longs are overwhelming the shorts at the moment. Naturally, such a trend suggests the majority sentiment is bullish.<\/p>\n Now, here is a chart that shows the trend in the Ethereum funding rates over the past fifteen months or so:<\/p>\n Looks like the value of the metric has been a deep red in recent days | Source: CryptoQuant<\/a><\/p>\n As you can see in the above graph, the Ethereum funding rates have declined recently, and have now hit highly negative values.<\/p>\n The indicator\u2019s current values are the lowest they have been since the July of last year, around fourteen months ago.<\/p>\n Back then, these values lead to a big short squeeze<\/a> taking place in the market that pumped the price of the crypto up.<\/p>\n In a short squeeze, a swing up in the value of Ethereum while the market is overleveraged liquidates a large amount of shorts. These liquidations push the price up even higher, leading to more shorts being flushed down. In this way, liquidations cascade together during a squeeze.<\/p>\n Related Reading: Ethereum Price Plummets 9% As Fed Chair Passes Hawkish Remarks<\/a><\/p>\n Generally, highly positive funding rates can lead to long squeezes (since there are more longs in the market), while negative ones may result in shorts getting squeezed.<\/p>\n If the same trend as 14 months ago repeats this time as well, then it\u2019s possible Ethereum could reverse using a short squeeze this time as well.<\/p>\n ETH Price<\/p>\n
\nFeatured image from DrawKit Illustrations on Unsplash.com, charts from TradingView.com, CryptoQuant.com<\/p>","protected":false},"excerpt":{"rendered":"