Market data on Friday indicates that Ethereum (ETH) bulls are betting on the recent price expansion shown by the cryptocurrency. However, exchange data is cautioning that the pace of increase in funding rates is leading the rise in price, creating ripe conditions for a so-called ‘long squeeze’ that could liquidate the ETH bulls.
ETH funding re-accelerating faster than price
According to exchange data obtained on Friday, ETH funding rates are seeing a sharp spike across all crypto exchanges once again. Notably, the average ETH funding rate has surged to 0.0163 percent while ETH trades near the $1,730 level.
For the uninitiated, funding rates are periodic payments exchanged between long and short traders in perpetual futures markets to keep the contract price aligned with the spot price.
When funding is positive, traders holding long positions pay shorts, indicating bullish sentiment and crowded long positioning. On the contrary, when the funding rate is negative, shorts pay longs, signaling bearish sentiment.
The current funding rate is significantly higher than that observed on May 24, when the funding rate stood near the 0.0093 percent level, while ETH exchanged hands at roughly $2,100. Essentially, funding has strengthened while price has weakened.
By June 5, ETH price had tumbled to around $1,580, while the funding rate cooled a little to 0.0047 percent. It showed that although the long-side pressure of the trade had eased a little, the ETH market never really entered a sustained negative-funding reset.
Since June 5, ETH’s price has sustained above the lows. Meanwhile, the funding rate has re-accelerated to levels higher than what was seen during late May. As a result, it can be said that long-side bias has rebuilt ahead of structural recovery of the digital asset.
While this dynamic doesn’t guarantee a downside for ETH – since a positive funding rate can support price continuation following structural confirmation – the major risk lies in the fact that ETH price hasn’t quite been able to keep up with the rising funding rate.
Such conditions typically tend to precede a long squeeze, which happens when heavily positioned long traders are forced to sell as price falls, triggering cascading liquidations that accelerate the downside move.
ETH gaining ground against Bitcoin
In a separate X post by crypto trader Michael van de Poppe, the trader noted that ETH has been outperforming Bitcoin (BTC) over the past few days. Recently, the cryptocurrency posted its strongest weekly candle against the top digital asset by market cap since August 2025.
A stronger ETH against BTC is usually a sign of an upcoming ‘altseason’ – a period in the crypto market that sees almost all altcoins experiencing extraordinary price appreciation in a short duration.
That said, there’s still no clear breakout in any long-term timeframe – daily or weekly. Poppe highlighted that for a real possibility of an altseason happening, ETH must first break through the 0.028 level in the coming weeks.
