Data shows that Ethereum funding rates have fallen into negative territory. Here's what has generally followed this trend over the past two months:
Ethereum funding rates suggest traders are now bearish.
As analytics firm Santiment explains in a new post on X, the Ethereum derivatives market is currently dominated by short selling. The indicator of relevance here is the “funding ratio,” which measures the amount of regular fees that traders exchange with each other on various derivatives platforms.
A positive value for this metric means that long-term holders are paying a premium to short-term bettors to maintain their positions. This trend suggests that bullish sentiment is dominant.
On the other hand, indicators below zero suggest that derivatives traders as a whole may have a bearish mindset, as short positions are larger than long positions.
Now, a chart shared by Santiment shows the trend of Ethereum funding rates across all exchanges over the past few months.
Looks like the value of the metric has been negative in recent days | Source: Santiment on X
As you can see in the graph above, we have recently seen Ethereum funding rates fall into negative territory. This means that derivatives market balances have moved downward.
However, market sentiment turning red may not actually be negative for cryptocurrency prices. In the chart, the analytics firm highlights the patterns the asset has followed through this indicator over the past two months.
In this window, ETH appears to be trending against the funding rate. That is, noteworthy positive levels led to price corrections, while negative levels led to price rebounds.
The explanation behind this trend may lie in the fact that the dominant side of the market is more likely to get caught up in liquidation pressures. Such events tend to be violent, including a series of liquidations that again lead to price volatility.
Although the Ethereum funding rate has gone into the red, its value is still not as negative as the previous lows that led to the short squeeze, so it remains to be seen whether this will follow suit.
In other news, Ethereum experienced significant net exchange outflows of approximately $643 million last week, as institutional DeFi solutions provider Sentora revealed in an X post.
The outflows BTC and ETH have seen during the past week | Source: Sentora on X
Bitcoin has recorded exchange withdrawals of over $2 billion. “This is a strong bullish signal despite market uncertainty as investors are moving their coins into self-storage for long-term holding,” Sentora explained.
ETH price
As of this writing, Ethereum is trading at around $3,850, up more than 2% in the last 24 hours.
The price of the coin appears to have been going down over the last few days | Source: ETHUSDT on TradingView
Dall-E, Santiment.net, featured image from Sentora.com, chart from TradingView.com
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