Bitcoin, Ethereum ready to bounce back! $15B liquidated in 48 hours
Funding Rates rebound, but are BTC and ETH bulls ready to reclaim wiped-out zones?
Key Takeaways
BTC and ETH faced sharp corrections as overleveraged longs were liquidated and Funding Rates flipped. With sentiment improving, conditions suggest the market could be primed for recovery.
The crypto market just endured a brutal 48-hour liquidation wave. Both Bitcoin [BTC] and Ethereum [ETH] saw sharp drops in price and Open Interest.
Panic selling, leveraged wipeouts, and a shift in trader sentiment have driven a fast-moving correction.
But with Funding Rates recovering and prices finding support, signs are emerging that the worst of the shakeout may be over.
Back to back shakeouts as BTC/ETH slides
The last two days saw ETH Open Interest fall by nearly $10 billion, while BTC shed over $5 billion.
These drawdowns erased several weeks of gradual Futures accumulation.
This abrupt drop is a sign of mass unwinding of leveraged positions, likely triggered by cascading liquidations and panic exits.
Meanwhile, the ETH/BTC ratio also broke lower after a strong July rally, slipping from 0.0325 to 0.0307.
Funding Rates flip and recover
On the 1st of August, Ethereum and Bitcoin Funding Rates on Binance briefly turned negative; an unusual sign of heavy bearish pressure, with ETH hitting -0.006% and BTC dipping to -0.003%.
This inversion indicated that short sellers were aggressively paying to keep positions open, often seen during long squeeze cascades. However, as of the 2nd of August, Funding Rates stabilized across exchanges.
Aggregated BTC funding has recovered to +0.0042, and ETH has climbed back to +0.0063.
This rebound suggests that bearish momentum may be cooling, and a shift toward market rebalancing (or even a short squeeze) could be underway.
Liquidation zones light up the charts
The BTC and ETH Liquidation Heatmaps show leveraged longs were wiped out en masse during the price slide.
Bright yellow bands cluster around $117K for BTC and $3600 for ETH on the 2nd of August, showing where longs got trapped before cascading liquidations accelerated the drawdown.
With price action now consolidating just below these levels, they may act as resistance in the near term, not only due to technicals, but also trader psychology.
Still, the absence of heavy liquidation bands below current prices suggests the worst of the deleveraging may have passed.
That said, upside recovery will likely face resistance near previously liquidated zones, now turned psychological barriers.
