Ethereum up 30%, but in crisis? ..."Short squeeze coming" warning

▲ Ethereum(ETH)

Ethereum (ETH) has risen 30% from its low. However, a strong short-selling position is being maintained in the market, forming an abnormal structure.

NewsBTC reported on May 2nd that Ethereum rebounded 30% from its February low, but many market participants are not acknowledging the rise and are maintaining aggressive short positions.

This trend is connected to the market sentiment formed after the previous sharp decline. Ethereum fell approximately 65% from its previous high, shocking the entire altcoin market, and the total market capitalization of altcoins, excluding Bitcoin, also decreased by over 51%.

Although the subsequent rebound was clear, the market sentiment did not change. Analyst Darkpost pointed out that even during the upward trend, investors are continuing an abnormal positioning, focusing on short selling instead of buying.

In particular, the funding rate on Binance consistently remained negative for over a month, maintaining an average level of -0.0018, which was identified as a key signal. This means that market participants are paying a fee to maintain their short positions.

A similar structure was last observed in November 2022 during the FTX collapse, at the end of the previous bear market. At that time, too, short positions were excessively accumulated during the rebound phase, followed by a strong upward trend.

Currently, a structure is forming in the market where short position liquidations are increasing, leading to additional buying pressure. The analysis suggests that a typical short squeeze environment is being created, where excessive short-selling positions actually accelerate the price increase.

In the short term, Ethereum's movement is restricted within key resistance zones, but as long as short-selling positions are maintained, a trend of increased volatility is likely to continue.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*