Leading Crypto Exchanges See Negative Funding Rates, Have Bears Taken Control?

Leading Crypto Exchanges See Negative Funding Rates, Have Bears Taken Control?

Prices have been falling across the entire crypto market, and with that, there has been a lot of doubt on the part of investors. This is reflected in the deposit and withdrawal trends recorded on various crypto exchanges. One of them is the financing rates which remained unchanged for most of the first half of 2022. However, there has now been some movement in the financing rates and unfortunately it is not for the better.

Funding rates turn negative

Two leading crypto exchanges have seen negative cryptocurrency funding rates in the past week. Binance and ByBit consistently appear at the top of the list for exchanges with the highest trading volume and have become a natural home for persistent traders. That is why changes on these platforms can be significant for market movements.

Related Reading | Bear Hold: Why Bitcoin Must Pass $22,500

Funding rates have fluctuated at and below neutral for most of the month, but it looks like the latter has finally won out. After bitcoin fell below $20,000 last week, expectations were that more traders would want to get in given the low prices. However, it has gone the other way as average financing rates are now negative.

Both Binance and ByBit recorded average funding rates of -0.0015 for the past week. A significant decline from the neutral 0.01% average aggregate funding rates. What this shows is that bearish sentiment among criminals is on the rise. As such, they leaned towards short traders.

Funding rates turn negative | Source: Arcane Research

Hot on the heels of open interest reaching new highs. Most of them come from Binance and ByBit. These two metrics clearly show that short traders are more active than long traders.

Crypto feeling still bad

Crypto perp traders are not the only ones in the market right now. The same is the case across the space where investors have decided to hold their cards closer to their chest than they might otherwise. The Index of fear and greed puts crypto market sentiment back into extreme fear territory. Which means the market has now been closed for two consecutive months with an extreme sense of fear.

Leading Crypto Exchanges See Negative Funding Rates, Have Bears Taken Control?

Total market cap falls below $900 billion | Source: Crypto Total Market Cap on TradingView.com

This is evident in the inflows and outflows from the exchange, which have declined over the past few days. However, the ratio of inflows and outflows shows that investors are refusing to take any risk in the market. According to Glassnode, net Bitcoin inflows were -$29.7 million after outflows reached $901.6 million in the past day.

Related Reading | Bitcoin records worst performance for June, will it get better from now on?

Tether inflows have remained muted as investors don’t want money in exchanges to buy tokens. With a positive net flow that only reached $14.2 million for the past day. The sell-off also continued, threatening to drag the market even lower.

Featured image from Analytics Insight, charts from Arcane Research and TradingView.com

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