LIVE#TrendingTopic $ETH The crypto market rally intensified on Feb 28, as Bitcoin and Ethereum prices both advanced to historic peaks.
While BTC price hit $64,000, ETH price came within just $12 of breaking the $3,500 resistance. However, vital signals from the Ethereum derivative markets suggest the pioneer smart-contract network could be at risk of a pull back.
CryptoQuant Funding Rates metric, presents a daily aggregate of fees paid between active traders of perpetual futures contracts for a specific cryptocurrency.
The chart below, shows that ETH funding rate recorded a noticeable spike on Feb 28, rising as high as 0.07% within the daily timeframe, the highest since April 2021.
A closer look at the historical market trends shows this is about 40% higher than the 0.06% Funding rate peak recorded in the build-up to ETH’s current all-time high price of $4,800 in November 2021.
Typically, such a dramatic surge in Funding Rates suggests that traders are overwhelmingly positive and markets are getting overheated with highly leveraged bullish bets.
This market dynamic is often tricky as it exposes the bulls to substantial losses if prices reverse course, potentially, leading to a long squeeze.
A long squeeze is a rare market phenomenon where aggressive selling pressure from short-term traders forces long position holders to liquidate their positions, exacerbating the downward price movement.
This cascading effect can trigger panic selling and margin calls on existing leveraged LONG contracts, further amplifying the price decline and causing significant losses for the bulls.
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