Bitcoin & Ethereum Primed for Epic Rebound After $15B Liquidation Storm

Crypto markets just took a brutal hit—now they're coiled for a comeback.

Blood in the streets? More like fuel for the rocket. Bitcoin and Ethereum shed $15 billion in liquidations over 48 hours, flushing out weak hands while setting the stage for a violent rebound. This isn't your average dip—it's a clearance sale with institutional buyers already circling.

When traditional markets sneeze, crypto gets pneumonia (and then does a line of adrenaline). The liquidation cascade created prime entry points for traders who've been waiting for a pullback. Now, derivatives markets show mounting bullish pressure as open interest rebuilds.

Will this be another 'buy when there's blood in the streets' moment? Or just another trap for overleveraged degenerates? Either way—Wall Street's still trying to short this market with 2008 playbooks.

Key Takeaways

BTC and ETH faced sharp corrections as overleveraged longs were liquidated and Funding Rates flipped. With sentiment improving, conditions suggest the market could be primed for recovery.

The crypto market just endured a brutal 48-hour liquidation wave. Both Bitcoin [BTC] and Ethereum [ETH] saw sharp drops in price and Open Interest.

Panic selling, Leveraged wipeouts, and a shift in trader sentiment have driven a fast-moving correction.

But with Funding Rates recovering and prices finding support, signs are emerging that the worst of the shakeout may be over.

Back to back shakeouts as BTC/ETH slides

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.