Darkfost2026-05-01

Short Squeeze builds on Ethereum as Funding mirrors FTX-Era Extremes

The altcoin market was hit hard during this downturn, with Ethereum at the forefront. ETH recorded a correction of around 65% from its last peak. TOTAL2, which represents the total market cap of altcoins (excluding BTC and stablecoins), also saw a significant decline of over 51%. However, conditions have improved notably since then. Ethereum is now trading more than 30% above its low recorded on February 6. Despite this recovery, most investors remain unconvinced and continue to take aggressive short positions. Throughout this rebound phase, funding rates on Binance have remained persistently negative at levels not seen for such a prolonged period. The last time a similar dynamic occurred was in November 2022, during the FTX collapse and the end of the previous bear market. Today’s environment is far from comparable, yet the monthly average funding rate on Binance stands at -0.0018. This reflects a strong consensus among investors who still do not believe in the rebound and prefer to position on the downside despite the corrections already observed. It is a risky bet, and some are already paying the price, as seen in rising short liquidation volumes. As ETH continues its upward momentum, short positions are increasingly being forced out of the market. This dynamic could further fuel Ethereum’s recovery, as cascading short liquidations continue to build. Markets rarely reward such a strong consensus.