#MarketSentimentWatch
As momentum starts to fade in spot markets, we can also see a decline in capital inflows within the perpetual futures market. The cooling of demand on the spot side has led to a sharp drop in perpetual open interest (OI) across all major assets, signalling a reduction in speculative activity and lower cash and carry yields.
Over the last 30 days, the rate of change in open interest highlights a widespread retreat of capital:
Bitcoin OI: -11.1%
Ethereum OI: -23.8%
Solana OI: -6.2%
Memecoins OI: -52.1%
This trend of declining open interest across the board suggests that speculators are reducing their leveraged exposure, likely in response to weaker market momentum and increasing market uncertainty. The most extreme decline is seen in Memecoins, which tend to attract more short-term leveraged bets but lose traction quickly whenever sentiment weakens.
This trend of declining open interest across the board suggests that speculators are reducing their leveraged exposure, likely in response to weaker market momentum and increasing market uncertainty. The most extreme decline is seen in Memecoins, which tend to attract more short-term leveraged bets but lose traction quickly whenever sentiment weakens.
Funding Rates Signal Bearish Sentiment
The weakening in open interest is further reinforced by a decline in perpetual futures funding rates. This reflects a shift toward more bearish sentiment and an unwinding of leveraged positions, particularly in riskier assets.
Bitcoin and Ethereum funding rates remain slightly positive, and their deeper liquidity profile tends to see positive funding rates except during sharp leverage wash-out events.
Solana funding rate have edged lower and have traded negative in recent weeks, signalling a cooling off of demand for long speculative positions.
Memecoins have seen funding rates turn very negative, indicating that shorts now dominate in these highly speculative assets, and many traders are closing their positions (or being liquidated).
Funding Rates Signal Bearish Sentiment#