On-chain analyst Darkpost diagnosed that ETH leverage overheating has calmed down. He explained in a CryptoQuant contribution, "ETH has been trading sideways in the $2250-$2450 range for nearly a month recently. This is a correction that occurred after a rebound of about 33% from the low in February. During the upward trend, ETH Open Interest (OI) increased by approximately $4.5 billion, and the ETH leverage ratio on Binance rose to 0.76 on March 16th, showing signs of leverage overheating. However, during the same period, funding rates mostly remained negative, indicating that investors were primarily moving towards short positions." He continued, "The current situation has changed. While ETH retested the $2450 resistance level, the Binance ETH leverage ratio dropped to 0.57. This change occurred after funding rates recently turned positive, leading to an expansion in the proportion of long positions. The market believes that long positions, which entered with breakthrough expectations, were quickly liquidated during the ETH correction process, and simultaneously, accumulated short positions were cleared, leading to a decrease in leverage. This is interpreted not as a short-term bearish signal, but rather as a process of market overheating easing. However, for a sustained upward breakout to occur, the inflow of spot buying, rather than derivatives, is a variable," he assessed.
