Ethereum’s price has been moving up, but not everyone is buying into it. In fact, a large part of the derivatives market seems to be betting the opposite way – even as positioning continues to grow.
Since February, open interest in Ethereum derivatives on Binance has increased by roughly 350,000 ETH. At current prices, that’s over $1 billion in additional exposure flowing into the platform, which now accounts for about 37% of the total market share.
On the surface, rising open interest tends to signal growing trader interest – implying more capital, and more trades. But the direction of that positioning tells a more nuanced story.
Ethereum traders are leaning short
What’s striking is that despite Ethereum gaining around 35% since its February lows, many traders are still positioning for a pullback. The clearest sign of that comes from funding rates on Binance, which have stayed mostly negative since late January.
For context, negative funding rates mean short positions are dominant – traders are paying to hold those bets. And lately, those rates have dropped below -0.01%, levels that don’t show up very often unless there’s a strong bias in one direction.
In simple terms, a lot of traders don’t seem convinced this rally has legs.
That kind of skepticism isn’t unusual after a prolonged downtrend. Markets often carry that disbelief phase where price starts to recover, but sentiment lags behind.
When everyone leans one way
The interesting part is what tends to happen when positioning becomes too one-sided.
Crypto markets have a habit of moving against the majority when consensus gets crowded. In this case, a buildup of short positions creates the conditions for short squeezes – where price moves higher, forcing those positions to close, which in turn pushes price up even more.
There’s already been a glimpse of that dynamic. Recently, more than $3 million in short positions were liquidated twice within the span of an hour on Binance.
It’s not massive in the grand scheme, but it shows how quickly things can unwind when the market starts moving against leveraged positions.
And with open interest still elevated, the setup is there for more of the same if momentum continues.
Signs of a shift?
There’s also an early hint that sentiment might be starting to turn. Funding rates, which had been negative for weeks, are now creeping back into positive territory – currently sitting around +0.01%, although the data is still developing.
If that shift holds, it could mark a change in how traders are positioning. Instead of consistently betting against the move, the derivatives market may start to support it.
That doesn’t mean the path will be smooth. But it does suggest that the heavy short bias that defined the past couple of months might be starting to ease.
