Ethereum (ETH) has declined noticeably over the past week, with price data from CoinMarketCap reporting a net decline of 14% during this period. At the time of the most recent data, ETH was trading around $2,000, which is significantly lower than last week’s level near $2,500.
ETH Funding Rates Signal Bullish Shift
In a QuickTake article on the CryptoQuant platform, analyst Amr Taha draws attention to recent developments in ETH funding rates, a key indicator of perpetual futures sentiment. The funding rate shows market sentiment, whether optimistic/eager (positive) or fearful/cautious (negative).
Generally, when funding is very positive or negative, it means that too many traders are on the same side, positions are overleveraged and the market becomes unstable. At this point, even a small price movement in the opposite direction can trigger liquidations, causing sharp and rapid price movements.
Although Ethereum’s funding rate was deeply negative during the week, analyst Amr Taha noted that there has been a reversal 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%, their 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 Sharp Moves
At the same time, ETH funding on Binance fell from deeply negative levels at -0.025% on February 5 to neutral, indicating that short positions are being replaced by new long exposures. In essence, the market has moved from fear to optimism.
While this change reflects a rise in bullish sentiment, history shows that periods of extremely positive leverage-fueled funding often increase the risk of sharp liquidations and corrective actions, rather than supporting sustained upside. In short, when everyone is optimistic at the same time, the market becomes easier to reverse.
Overall, Ethereum Derivatives traders have become aggressively bullish, and while this can drive prices higher in the short term, history shows that it 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 a 14.9% decline over the past seven days. Meanwhile, the daily trading volume is down 32.39% and valued at $37.39 billion.
