Ethereum’s price is currently positioned at $4,150, with the cryptocurrency grappling with increased selling pressure and a notable decline in funding rates. For the second time in a week, Ethereum funding rates have turned negative, indicating a shift in market sentiment among futures traders.
Recently, Ethereum exchange-traded funds (ETFs) experienced significant outflows, totaling $216 million over two consecutive days. This trend signals caution among institutional investors, particularly following the recent spike in leverage within the market. The negative funding rates now registered at -0.0021 have resulted from a larger leverage flush, reflecting a growing bearish outlook among traders. This decline marks a stark contrast to the more optimistic sentiments observed in August.
Funding rates, which are fees exchanged between perpetual futures traders to keep contract prices aligned with the underlying asset’s spot price, can provide insights into market dynamics. Negative rates imply that short position holders are paying long position holders, and in this instance, it suggests a prevailing bearish sentiment. Such positioning could indicate the potential for either a market bottom, leading to a short squeeze, or could contribute to a period of stagnant pricing.
The performance of corporate ETH treasuries has also been subdued recently, with little notable buy-side action apart from the activities of BitMine Immersion (BMNR). The company has made headlines for its steady accumulation of funds, recently adding over 264,000 ETH to its holdings, which has piqued interest in corporate treasuries.
On the price action front, Ethereum has seen around $62 million in futures liquidations in the past 24 hours, predominantly from long positions amounting to approximately $38.9 million. Currently, as ETH tests the crucial $4,000 support level, it is trading below both the 20-day and 50-day Simple Moving Averages (SMAs). Analysts suggest that if Ethereum falls below $4,000, it could approach the 100-day SMA around $3,700. Conversely, reclaiming the $4,500 level might open the door for a challenge against the all-time high resistance established on August 24.
Technical indicators reveal a bearish momentum, with the Relative Strength Index (RSI) positioned below its neutral level, while the Stochastic Oscillator has entered an oversold region. This suggests continued selling pressure could persist in the short term, raising concerns for Ethereum’s immediate price trajectory.
