The Ethereum derivatives market on Binance is showing a setup that could leave short sellers exposed if the recent surge continues. According to an analysis shared on
Ethereum attracts a large audience on Binance
The core of the argument is a mismatch between price action and the trader’s belief. Darkfost said that approximately 350,000 ETH has been added to open interest on Binance since February, which now represents approximately 37% of the total market share. At current prices, that amounts to more than $1 billion flowing into Binance’s ETH derivatives complex.
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What is striking is not only the size of that increase, but also the direction of the positioning behind it. “What is paradoxical is that despite the recent price increase (+35% since the February low), the majority of investors seem to be positioning themselves for a correction by shorting the market,” Darkfost wrote. “This can be observed from the ETH funding rates on Binance, which have reached levels not seen since the last bear market.”
This is important because funding rates provide an indication of which side of the perpetual futures market is leaning more aggressively. Darkfost said Binance funding has remained largely negative since late January, indicating traders have continued to pay to remain short rather than chase the recovery. In other words, the rise has not fully restored bearish conviction.
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The post argues that this skepticism has now reached levels that are unusual even by recent standards. “Observing such negative levels, with funding rates falling below -0.01%, is relatively rare and signals significant build-up of short positions as investors remain in disbelief,” Darkfost wrote. “When this level of consensus emerges, it is not uncommon for the market to move against the majority, leading to liquidations of the most aggressive positions and short squeeze events, as observed yesterday.”
That squeeze dynamic is already starting to show up in the liquidation data. Darkfost noted that more than $3 million in short positions were liquidated twice in one hour on Binance, a sign that even modest upward extensions are capable of driving leveraged bears out of the market. In busy situations, these forced exits can be self-reinforcing as liquidations add increasing buying pressure and push the price into the next group of vulnerable positions.
The broader implication is not necessarily that Ethereum is entering a linear rally, but that the derivatives structure has been tilted in such a way that the uptrend could be strengthened if sentiment continues to be slow to adjust. Darkfost described the recent rally as the “early phase of the uptrend,” arguing that months of short-term accumulation could continue to provide fuel if traders remain positioned for reversal rather than continuation.
However, there is one important shift underway. Funding rates are now starting to turn positive again, with Darkfost getting a figure of around +0.01%, although the day’s data was not yet complete. If that change holds, the market structure would look different: driven less by disbelief-fueled pressure, and more by traders starting to join the movement.
For now, the message from Binance’s ETH derivatives market is fairly clear. Shorts have been rushing in aggressively, but the busier the trading gets, the more vulnerable it is if Ethereum continues to rise.
At the time of writing, ETH was trading at $2,318.
Featured image created with DALL.E, chart from TradingView.com