Ethereum (ETH) Bulls Get Burned as $60M Long Positions Liquidated, But Funding Rate Offers Hope

Ethereum (ETH) bulls got a taste of fire on June 11th as the altcoin's derivatives market witnessed a dramatic surge in long liquidations.

Ethereum (ETH) derivatives market experienced a dramatic surge in long liquidations on June 11, highlighting a day of reckoning for traders betting on rising prices.

According to data from Coinglass, the altcoin’s derivatives market witnessed the highest level of long liquidations since May 23. This event typically occurs when the price moves in the opposite direction of a trader’s leveraged position, leading to a forced closure of the trade by the exchange to minimize losses.

On June 11, the total long liquidations amounted to a staggering $60.84 million, a significant correction for traders who wagered on rising prices. In contrast, short liquidations were minimal at $0.04 million. This vast disparity showcases the market’s bullish sentiment, despite the setback.

Moreover, the derivatives market displayed a positive Funding Rate, indicating a strong demand for long positions. In simpler terms, traders holding short positions (betting on a price decline) paid a fee to those holding long positions. This scenario arises when there are more traders betting on a price increase, creating a net positive Funding Rate.

Interestingly, ETH’s Funding Rate has remained positive since May 3, highlighting bullish sentiment among traders despite the market correction.

However, the derivatives market also presented some concerning signals. Both options trading volume and Open Interest (total outstanding contracts) saw a significant drop.

Over the past 24 hours, the options trading volume decreased by 50%, while Open Interest dropped by 2%. This decline indicates a potential flight from the market, with fewer participants actively trading options contracts or holding open positions.

In a separate development, CoinCodex’s current Ether price prediction anticipates a 2.46% rise to $3,636 by July 13, 2024. Despite this positive outlook, the market sentiment remains bearish.

The Fear & Greed Index stands at 70 (Greed), indicating strong investor interest. Over the last 30 days, ETH has shown strong volatility, with positive gains on 53% of the days and an overall price fluctuation of 8.63%. While the short-term forecast is optimistic, the mixed signals highlight the need for cautionary investment.