Bearish Signal For Ethereum: Funding Rates Hit New 2024 Lows—Is A Rally Still Possible?
17 September 2024 - 11:30AM
NEWSBTC
Ethereum, the second-largest cryptocurrency by market
capitalization, is experiencing increasing bearish sentiment in its
futures market, according to a recent analysis by CryptoQuant
analyst ShayanBTC. The analyst reported on the CryptoQuant
QuickTake platform that Ethereum’s futures market has shown its
lowest funding rates of 2024. This trend indicates that traders in
the perpetual futures market are currently less optimistic about
Ethereum’s short-term price movements. Related Reading: Ethereum
Sees Massive Outflows from Derivatives: What Does This Mean For
ETH? Ethereum Declining Funding Rates And Market Implications
According to ShayanBTC, the 50-day moving average of Ethereum’s
funding rates has been on a consistent downward trend, indicating a
persistent bearish outlook among futures traders. For context,
funding rates in perpetual futures contracts are payments made
between long and short traders based on the difference between
perpetual futures and spot prices. When funding rates are positive,
it implies that long traders pay short traders, suggesting bullish
sentiment. Conversely, negative funding rates mean short traders
pay long traders, signaling a more bearish market stance. In the
case of Ethereum, the current negative trend in funding rates
highlights a lack of buying interest in the perpetual futures
market. Shayan noted: 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. Is A Rally Still Possible? The impact of these bearish
funding rates has been quite evident in Ethereum’s recent
performance. So far, the cryptocurrency has experienced a
consistent decline, dropping by 4.9% in the past 24 hours alone.
This decline has dragged Ethereum’s price below the $2,300 mark,
compounding its losses over the past month to more than 10%. The
persistent bearishness is partly attributed to the “lack of buying
interest” in the futures market, as noted by the CryptoQuant
analyst. Despite the negative sentiment in the futures market, some
analysts remain optimistic about Ethereum’s potential for a
rebound. One such analyst, Koroush AK, expressed a more positive
outlook, suggesting that Ethereum is due for a significant bounce.
Related Reading: Analyst Predicts $4,000 Mid-Term Target for
Ethereum, Declares End to ETH Correction Koroush pointed to higher
time frames, highlighting the 100-week moving average and the key
psychological support level at $2,000 as potential catalysts for a
recovery. He anticipates a 10-20% bounce for Ethereum in the coming
weeks despite the current market conditions. $ETH Ethereum due a
large bounce. Zooming out and looking at the higher time frames;
-100 week moving average -Key psychological support ($2000)
Expecting a 10-20% bounce over next few weeks.
pic.twitter.com/THPPc99oMf — Koroush AK (@KoroushAK) September 16,
2024 Notably, while negative funding rates often reflect a bearish
market sentiment, they can also be early indicators of potential
market recovery. Negative rates can result in short liquidation
cascades, where short positions are forced to close, leading to a
sharp price reversal. Featured image created with DALL-E, Chart
from TradingView
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