Today, let's talk about Ethereum's short-term price trend. ETH has far lagged behind Bitcoin this year, but in recent weeks, there has finally been a strong rebound. So, will Ethereum rise or fall in the short term? We can see some clues from the Ethereum derivatives market.

First, the open contracts of Ethereum futures have been rising recently, and last Friday, they surged by more than 12%, creating a historical high of 20.8 billion USD. The open contract volume of futures refers to the total number of unsettled contracts in the derivatives market. Currently, this indicator for Ethereum has reached unprecedented levels. As you can see in this chart, generally, higher open contracts indicate a more bullish sentiment towards Ethereum's price. Why do we know that everyone leans towards bullish rather than bearish? It's simple: because its futures funding rate is positive, and over the past week, this funding rate has surged multiple times, reaching a historical peak, currently around 0.0374%. This is also evidence of a strong bullish sentiment.

Second, the estimated leverage ratio for Ethereum, which is the ratio of open contract volume to the reserves held by exchanges, is also rising rapidly, climbing to a new record of 0.4. This indicates that traders are increasing their risk exposure by using higher leverage to amplify potential returns. Ultimately, this high leverage and the dominance of long positions could lead to volatility issues for Ethereum. This means the risk of a long squeeze is increasing, and short-term price fluctuations could trigger these longs to be liquidated, resulting in a significant pullback in Ethereum's price.

However, because we are in a bull market, I feel that a short squeeze may occur first. This is because there are still a large number of leveraged positions in this micro Ethereum futures, for example, the short positions from hedge funds; the more long positions that are added, the more it will squeeze these shorts.

Especially when looking at the large cash-settled futures, in the past two weeks, the open contracts recorded the second-largest single-week increase in history. This phenomenon further reinforces the market's tug-of-war between bulls and bears.

So, in summary, from the perspective of the derivatives market, the potential for market volatility in Ethereum appears to be intensifying. It is very likely that we will see it reach new highs this year, just like Bitcoin, which means a historical high. However, if the trend reverses, the extent of its decline could also be particularly significant. Everyone, please pay attention to the risks. How do you view Ethereum's short-term trend?

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