The perpetual futures market plays a crucial role in shaping the overall price movement of the crypto market. By examining the sentiment of futures traders, we can gain valuable insights into potential future price trends. This chart shows the 50-day moving average of Ethereum's (ETH) funding rates, providing a broader view of whether buyers or sellers are executing orders more aggressively through market orders in the futures market.
Recently, the 50-day moving average of ETH funding rates has been on a consistent downtrend, reaching its lowest levels in 2024. This persistent decline highlights the prevailing bearish sentiment, signaling a lack of buying interest from traders. For Ethereum to recover and reach higher price levels, demand in the perpetual futures market must increase. If the current trend of negative funding rates continues, it is likely that Ethereum will experience further price declines in the mid-term.
However, it's important to note that while negative funding rates are typically seen as bearish, they can sometimes be an early signal of market recovery. Negative funding often leads to short liquidation cascades, which can trigger price reversals, but this is highly dependent on whether there is sufficient spot buying pressure to support a rebound. Without stronger demand from spot buyers, Ethereum’s price may remain under pressure.
Written by ShayanBTC
