The perpetual futures market plays a vital role in crypto price movements. Analyzing futures trader sentiment provides valuable insights into future price trends. The 50-day moving average of the Ethereum (ETH) funding rate indicates whether buyers or sellers are more aggressive in placing market orders.

Recently, the 50-day average of the ETH funding rate has been steadily declining, reaching its lowest level in 2024. This decline indicates a dominant bearish sentiment and a lack of buying interest from traders. For Ethereum to recover, demand in the perpetual futures market must increase. If this negative trend continues, the ETH price is likely to continue to fall in the medium term.

However, negative funding rates can sometimes be an early sign of a market recovery. Short liquidations can trigger a price reversal, but this is highly dependent on sufficient spot buying pressure. Without stronger demand from spot buyers, the Ethereum price may remain depressed.