02/03/2026
🔴 ETH Funding Rates hit FTX-era extreme level.
The crypto market pushed further lower today, primarily driven by rising geopolitical tensions between the United States and Iran.
This renewed wave of risk aversion triggered another round of broad selloffs across risk assets, and crypto was clearly not spared.
At today’s low, total crypto market capitalization dropped by nearly $300B in a single session, bringing cumulative losses to roughly $470B over the past three days.
This sharp, directional correction mechanically triggered a cascade of liquidations across the derivatives market.
❌ More than $2.5B in positions were liquidated, including approximately $1.1B on Ethereum alone.
As a direct consequence, these mass liquidations created a significant imbalance between the perpetual and spot markets for Ethereum.
ETH perpetual prices decoupled sharply to the downside relative to spot, reflecting an excess of selling pressure in derivatives.
To restore equilibrium, the market was forced to aggressively adjust funding rates.
💥 On Binance, ETH funding rates flipped into negative territory, reaching -0.028%, a historically extreme level.
Such readings are only observed during periods of severe market stress.
The last time ETH funding rates reached similar levels was during the FTX collapse, a phase marked by systemic panic and forced liquidations.
This dynamic is also visible across the broader market, with aggregated funding rates falling to -0.078 across exchanges.
👉 Extremely negative funding rates combined with the scale of liquidations point to excessive pessimism in derivatives markets, but this alone does not yet constitute a reversal signal.
As long as geopolitical tensions persist and liquidity remains constrained, caution is still warranted. The market is in a cleansing phase, not yet in a rebuilding phase.
