Ethereum Enters FTX-Style Panic as Funding Rates Turn Deeply Negative

• Ethereum funding rates hit -0.028% on Binance, matching extreme levels last seen during the FTX collapse in 2022.
• Over $1.1 billion in ETH positions liquidated as price crashes below $2,500 support to test the $2,200 zone.
• Geopolitical tensions between the US and Iran trigger $470B crypto market loss over three days amid selloff.

Ethereum has entered a critical stress zone. Funding rates on major exchanges have plummeted to levels not seen since the FTX collapse. 

The decline comes as geopolitical tensions between the United States and Iran trigger a broad crypto market selloff. Total market capitalization shed nearly $300 billion in a single session. Cumulative losses over three days now exceed $470 billion.

Mass Liquidations Push ETH Into Negative Funding Territory

The market chaos triggered over $2.5 billion in liquidations across crypto derivatives. Ethereum bore a significant portion of the damage. 

According to data shared by analyst Darkfost, approximately $1.1 billion in ETH positions were liquidated. This forced selling created a sharp disconnect between perpetual and spot markets.

Binance recorded ETH funding rates at -0.028%, an extreme negative reading. Such levels typically appear only during severe market distress. The last comparable instance occurred during the FTX collapse in late 2022. 

Aggregated funding rates across exchanges fell even further to -0.078%.

ETH Price Tests Critical Support Zones

Ethereum lost its $2,500 support level before experiencing a flash crash. The asset now hovers above $2,200, a zone that served as accumulation territory in Q2 2025. 

Analyst Ted warns that losing this level could send ETH toward $1,700-$1,800. Conversely, reclaiming $2,500 might trigger a 10%-15% relief rally.

Current price data from CoinGecko shows ETH trading at $2,391.12. The 24-hour trading volume stands at $52.6 billion. This marks a 9.69% decline in the past day and an 18.28% drop over seven days.

Perpetual Markets Show Extreme Pessimism

Negative funding rates indicate shorts are paying longs to maintain positions. The current readings reflect excessive bearish sentiment in derivatives markets. 

When perpetual prices fall below spot prices, the funding mechanism adjusts to restore balance. The severity of these adjustments reveals the intensity of selling pressure.

Darkfost notes that while extreme negativity often precedes bottoms, this alone doesn’t confirm a reversal. The analyst emphasizes that ongoing geopolitical tensions and constrained liquidity warrant continued caution.

Market Remains in Cleansing Phase

The crypto market continues to purge overleveraged positions. Risk aversion stemming from Middle East tensions has amplified the correction. 

Ethereum’s derivative markets are bearing the brunt of this deleveraging event. The combination of mass liquidations and deeply negative funding rates signals a market under significant stress.

Whether this represents capitulation or further downside remains uncertain. Historical parallels to the FTX crisis suggest extreme caution is justified. 

The market has not yet entered a rebuilding phase. Until geopolitical risks subside and liquidity improves, volatility will likely persist across crypto assets.

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