Ethereum’s derivatives market on Binance is flashing a setup that could leave short sellers exposed if the recent move higher continues. According to analysis shared on X by CryptoQuant contributor Darkfost, positioning has become increasingly one-sided even as ETH has rebounded sharply from its February low, creating the conditions for further short squeezes.

Ethereum Bears Crowd In On Binance

The core of the argument is a mismatch between price action and trader conviction. Darkfost said that since February, around 350,000 ETH has been added to open interest on Binance, which now represents roughly 37% of 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 stands out is not just the size of that increase, but the direction of positioning behind it. “What is paradoxical is that despite the recent price increase (+35% since the February low), the majority of investors appear to be positioning for a correction by shorting the market,” Darkfost wrote. “This can be observed through ETH funding rates on Binance, which have reached levels not seen since the previous bear market.”

That matters because funding rates offer a read on which side of the perpetual futures market is leaning more aggressively. Darkfost said Binance funding has remained mostly negative since late January, suggesting traders have continued to pay to hold short exposure rather than chase the rebound. In other words, the move higher has not fully reset bearish conviction.

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The post argues that this skepticism has now reached a level that is unusual even by recent standards. “Observing such negative levels, with funding rates dropping below -0.01%, is relatively rare and indicates a significant buildup of short positions while investors remain in disbelief,” Darkfost wrote. “When this level of consensus forms, it is not uncommon for the market to move against the majority, triggering liquidations of the most aggressive positions and leading to short squeeze events, like the one observed yesterday.”

That squeeze dynamic has already started to show up in the liquidation data. Darkfost noted that more than $3 million in short positions were liquidated twice within a single hour on Binance, a sign that even modest upside extensions are capable of forcing leveraged bears out of the market. In crowded setups, those forced exits can become self-reinforcing, as liquidations add incremental buy pressure and push price into the next pocket of vulnerable positions.

The broader implication is not necessarily that Ethereum is entering a straight-line rally, but that the derivatives structure has tilted in a way that can amplify upside if sentiment remains slow to adjust. Darkfost framed the recent rally as the “early phase of the uptrend,” arguing that months of short accumulation could continue to provide fuel if traders remain positioned for reversal rather than continuation.

There is, however, one important shift underway. Funding rates are now beginning to turn positive again, with Darkfost citing a reading around +0.01%, though the day’s data was not yet complete. If that change holds, the market structure would begin to look different: less driven by disbelief-fueled squeezes, and more by traders starting to align with the move.

For now, the message from Binance’s ETH derivatives market is fairly clear. Shorts have piled in aggressively, but the more crowded that trade becomes, the more fragile it is if Ethereum keeps grinding higher.

At press time, ETH traded at $2,318.

Featured image created with DALL.E, chart from TradingView.com

Key takeaways

• PancakeSwap is holding above the key support level at $1.55, hinting at an upside move ahead.
• Rising open interest alongside positive funding rates signals increasing participation.

PancakeSwap (CAKE) is trading in the green above $1.60 on Thursday after finding support around this key level the previous day. Positive derivatives data, along with constructive price action, suggest that CAKE could continue its upward trajectory in the coming days.

Bullish derivatives data pushes CAKE higher

CoinGlass data reveals a sharp increase in the futures’ Open Interest (OI) for PancakeSwap, which rose to $32.48 million on Tuesday and climbed further to $32.28 million on Thursday, the highest level since March 17. 

The steady increase in OI signals that new money is entering the market, which could sustain CAKE’s ongoing price rally.

Additionally, the funding rates are showing a positive shift, further supporting the bullish sentiment. CoinGlass’ OI-Weighted Funding Rate for CAKE turned positive on Wednesday and reads 0.0056% on Thursday. 

This indicates that long positions are paying short positions, further suggesting that the market sentiment remains bullish.

PancakeSwap price forecast: momentum indicators suggest further rally

The CAKE/USDT 4-hour chart is bullish and efficient, as Pancakeswap is trading at $1.60 at press time.

The coin retains a constructive bias, supported by its positioning above the 50-day and 100-day Exponential Moving Averages (EMAs) at $1.46 and $1.57, respectively. 

CAKE’s current price action indicates that underlying demand continues to drive the recent advance, despite CAKE remaining below the 200-day EMA at $1.81, which marks the upper boundary of the broader corrective structure.

The Relative Strength Index (RSI) on the daily chart is at 64, suggesting that while the price has firm upside momentum, it could be vulnerable to consolidation as it nears overbought territory. 

The Moving Average Convergence Divergence (MACD) remains positive, reinforcing the bullish short-term outlook.

On the upside, initial resistance is found at the 50% retracement of the latest swing at $1.67, followed by the 61.8% Fibonacci level at $1.78 and a nearby horizontal resistance at $1.79. The 200-day EMA at $1.81 represents a more substantial barrier.

However, if the bears regain control, immediate support lies at the 100-day EMA at $1.57, followed by the 38.2% retracement at $1.55. 

A deeper pullback could test the 50-day EMA at $1.46 and the 23.6% Fibonacci level at $1.40, with stronger structural support emerging near $1.28.

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