The last two days saw ETH Open Interest fall by nearly $10 billion, while BTC shed over $5 billion.
Source: CoinGlass
These drawdowns erased several weeks of gradual Futures accumulation.
Source: CoinGlass
This abrupt drop is a sign of mass unwinding of leveraged positions, likely triggered by cascading liquidations and panic exits.
Source: TradingView
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.
Source: Coinalyze
Aggregated BTC funding has recovered to +0.0042, and ETH has climbed back to +0.0063.
Source: Coinalyze
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
Source: CoinGlass
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.
Source: CoinGlass
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.
