Analysts caution about possible series of Ethereum position liquidations.
May 1, 2026
Analysts at CryptoQuant and Arkham have detected some unusual patterns in the derivatives of Ethereum, the second-largest cryptocurrency based on market capitalization. One expert, known as Arab Chain, pointed out a decrease in open interest for Ethereum specifically on the Binance exchange. This metric dropped to $4.99 billion, a noticeable decrease from the average of $5.31 billion, indicating a potential lack of trader confidence in the current market conditions.
According to the data, the negative MVRV Z-Score of -0.91 further confirms a liquidity outflow. Arab Chain suggested that traders are hesitant to initiate new positions due to the uncertainty surrounding the potential for rapid growth in the market. Another expert under the pseudonym Darkfost raised concerns about a possible short squeeze scenario. Despite Ethereum’s price bouncing back by more than 30% since its recent low on February 6, the asset had experienced a significant decline, losing approximately 65% of its value and halving the altcoin market capitalization.
Despite the rebound, investors are still actively opening short positions. Funding rates on Binance have consistently remained negative, a trend that has not been seen since November 2022 after the FTX collapse. The average funding rate for the month stood at -0.0018, indicating a lack of confidence from market participants in sustained growth, signaling expectations for a downward movement. Darkfost cautioned against this risky strategy, highlighting the increasing volume of liquidations of short positions. The forced closure of these shorts could potentially trigger a cascading effect, ultimately driving up Ethereum’s price even further. The expert stressed that the majority consensus in the market is not always rewarded.
In the midst of these dynamics, notable players are continuing to accumulate Ethereum. Arkham reported that Tom Lee, the founder of Fundstrat, has staked a significant amount of ETH totaling 217,350, with a value of approximately $508.4 million, in various staking protocols. Additionally, the BitMine platform has increased its locked assets to a total of 4 million ETH, equivalent to $9.3 billion based on the current rate, representing about 10.5% of the total supply of Ethereum currently staked.
On April 10, the daily transaction volume on Ethereum’s blockchain approached 1.3 million, indicating a high level of activity within the network. These developments suggest a complex interplay of factors influencing Ethereum’s price movements and market sentiment, underscoring the need for caution and careful observation in navigating the current landscape of cryptocurrency derivatives.
