Ethereum Funding Rate Turns Red: Short Squeeze Brewing?

Data shows the Ethereum Funding Rate has declined into the negative zone. Here’s what has usually followed this trend in the last two months.

Ethereum Funding Rate Suggests Traders Are Now Bearish

As explained by analytics firm Santiment in a new post on X, shorts are dominating the Ethereum derivatives market now. The indicator of relevance here is the “ Funding Rate ,” which measures the amount of periodic fee that traders are exchanging between each other on the various derivatives platforms.

When the value of this metric is positive, it means long holders are paying a premium to those with short bets in order to hold onto their positions. Such a trend implies a bullish sentiment is dominant.

On the other hand, the indicator being under the zero mark suggests the derivatives tra