Recent data indicates that both Ethereum (ETH) and XRP have set funding rate records among all Layer-1 blockchains. This suggests that traders are actively taking long positions, yet further metrics raise questions about the market's optimism.
Bullish Trend for ETH and XRP
According to Glassnode, ETH's funding rate has reached 0.0083%, while XRP's is at 0.0093%. These figures indicate a strong bullish bias, as higher funding rates signify traders expecting price increases.
Discrepancy with On-Chain Activity
Despite bullish sentiment, on-chain activity metrics show mixed results. Ethereum continues to struggle with high gas fees, which are slowing transaction flows. The latest snapshot indicates a 24-hour transaction volume of $2.6 billion, but active addresses have decreased by 11.4%. XRP is also experiencing volatility; although its price is $2.19, the number of active wallets has dropped by 34.3%.
Risks of Over-Leveraged Longs
The primary risk lies in potential liquidations of over-leveraged long positions. Elevated funding rates without significant price gains could lead to sharp downturns. If no new catalysts emerge, such as ETF approval for ETH, long positions might be caught in market volatility.
Although funding rates are rising, the current market situation is complex. Optimism is not backed by sufficient on-chain activity, and traders need to remain cautious to avoid overexposure to potential traps.
