Ethereum Funding Rate drops to lowest level in 2024: Impact on ETH?
The post Ethereum Funding Rate drops to lowest level in 2024: Impact on ETH? appeared on BitcoinEthereumNews.com.
Journalist Posted: September 18, 2024 ETH saw its lowest Funding Rate of the year. ETH is trading around the $2,300 price level. Ethereum [ETH] has seen a notable decline in its derivative market, signaling a potential shift in market sentiment. However, interpreting this decline can lead to different conclusions depending on how other factors, such as the spot volume, perform. Ethereum’s Funding Rate declines The recent data from CryptoQuant revealed that Ethereum’s Funding Rate hit its lowest point of the year, signaling a sharp decline in buying interest from derivative traders. Funding Rate is a key indicator used in Futures markets to measure the cost of holding long (buy) or short (sell) positions. A negative Funding Rate means that short sellers are paying long holders to keep their positions open, suggesting a bearish sentiment. ETH’s Funding Rate dropping to its lowest level this year reflects a decline in demand for buying Ethereum on leverage through derivatives. This could be a bearish sign for the price in the short term. Source: CryptoQuant The decline in the Funding Rate indicates a lack of enthusiasm from traders in the derivatives market, which could further pressure Ethereum’s price. A potential for Ethereum short squeeze With fewer traders willing to take long positions, the Ethereum downward trend could continue unless spot buyers step in to absorb the sell pressure. However, while the low Funding Rate suggests a bearish sentiment, it also sets the stage for a potential short liquidation cascade. The negative Funding Rate could quickly reverse if spot buyers enter the market sufficiently. This forces short sellers to close their positions, resulting in forced buying (short squeeze), which can increase the price. How ETH’s volume has trended The analysis of Ethereum’s spot volume on Santiment showed that the current average volume has held steady…
Filed under: News - @ September 18, 2024 3:23 am