Bitcoin and Ethereum just underwent a large-scale liquidation as high-leverage long positions were 'blown away', causing Open Interest to drop by more than 15 billion USD. Funding rates turned negative - a sign of extreme pessimism - but quickly recovered, indicating that market sentiment is gradually stabilizing.
Market highlights:
Bitcoin and Ethereum lost a total of 15 billion USD in Open Interest due to the domino effect from long positions being liquidated.
Negative funding rates are rare, reflecting extreme selling pressure, followed by a recovery to positive, signaling a return of investor confidence.
The liquidation price zone has become a new psychological resistance, challenging the recovery trend in the short term.
Ethereum is more volatile than Bitcoin, heavily influenced by leverage and DeFi capital flows.
Experts believe that this 'long squeeze' may be a necessary cleansing step before a new growth cycle. New capital flows along with improving on-chain indicators will be key to confirming a sustainable reversal trend.