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>>Ethereum Correction Warning: A heavy buildup of Binance long positions points to liquidation danger.

Ethereum Correction Warning: A heavy buildup of Binance long positions points to liquidation danger.

crypthub

about 2 hours ago

Derivatives Concentration Alarm

Ethereum open interest on Binance jumped from $2.4 bn to $4.15 bn in days, a 73% rise, while short positions vanished. The market is now heavily skewed toward longs, a pattern that historically precedes sharp corrections. Similar leverage buildups caused $8 bn of liquidations in May 2021. Analysts warn that this one‑sided exposure could spark a rapid unwind.

Liquidation Cascade Risks

When prices fall, margin calls force sells that add downward pressure, triggering further liquidations in a self‑reinforcing loop. Binance’s funding rates stay elevated, confirming bullish bias and amplifying systemic risk. On‑chain profit hit $5.8 m, near the $6 m threshold that has preceded past drops. The MVRV ratio also approaches overvaluation levels above 3.5.

Broader Context and Mitigation

Binance holds about 40% of total ETH open interest, so its risk controls affect the whole ecosystem amid tightening global regulation. Experts advise smaller position sizes, diversification across exchanges, and monitoring funding rates and collateral buffers. Institutional players use cross‑exchange hedges and options where available to dampen volatility.