Ethereum (ETH) has fallen significantly over the past week, with price data from CoinMarketCap showing a net decline of 14% over the period. At the time of the latest data release, ETH is trading at around $2,000, which is significantly lower than last week’s level of around $2,500.
ETH Funding Rates Signal Bullish Return
In QuickTake post on the CryptoQuant platform, analyst Amr Taha highlights recent changes in ETH funding rates, a key sentiment indicator for perpetual futures. The funding rate shows market sentiment, whether it is sanguine/greedy (positive) or fearful/cautious (negative).
Typically, when funding is highly positive or negative, it means that too many traders are on one side, positions are over-leveraged, and then the market becomes volatile. At this point, even a compact price movement in the opposite direction can trigger liquidation, causing prices to move wildly and quickly.
Although Ethereum’s funding rate has been deeply negative during the week, analyst Amr Taha noted that there has been a turnaround as ETH derivatives data shows a clear shift towards bullish positioning. Notably, funding rates turned strongly positive on BitMEX (Bitcoin Mercantile Exchange), reaching 0.049%, the highest level since October and well above the previous peak near 0.03. This signals aggressive leverage on the long side.
Extreme optimism in ETH could trigger edged moves
At the same time, ETH funding on Binance has moved from a deeply negative -0.025% level on February 5 back to neutral, indicating that low positions are being replaced by fresh long exposure. Basically, the market has moved from fear to optimism.
While this shift reflects an escalate in bullish sentiment, history shows that periods of extremely positive leveraged financing often escalate the risk of liquidations and rapid turnaround moves rather than supporting sustainable growth. In low, when everyone is sanguine at the same time, the market becomes easier to turn around.
Overall, Ethereum derivatives traders have become aggressively bullish, and while this may push the price higher in the low term, history shows that this often increases the risk of sudden corrective moves rather than a sustained uptrend. At the time of writing, Ethereum is trading at $2,089, after falling 14.9% over the last seven days. Meanwhile, daily trading volume dropped by 32.39% and amounted to $37.39 billion.
