According to a recent report by BlockBeats, data from Coinglass reveals a noticeable shift toward bearish sentiment across major centralized and decentralized cryptocurrency exchanges. The funding rates for leading cryptocurrencies have dropped, reflecting growing caution in the derivatives market.
What Are Funding Rates?
Funding rates are periodic payments exchanged between traders holding long and short positions in perpetual futures contracts. These rates are not charged by exchanges themselves but are used to keep contract prices aligned with the spot market prices. A positive funding rate means traders holding long positions pay a fee to those holding short positions, typically indicating bullish market sentiment. Conversely, a negative or below-average funding rate implies bearish sentiment.
Bearish Signs Emerging
The standard baseline funding rate is around 0.01%. When this rate rises above the benchmark, it usually suggests that traders expect prices to go higher — a bullish signal. However, current data shows funding rates slipping below 0.005%, which historically points to bearish expectations and increased short positioning.
This trend could suggest that traders are either hedging their positions or anticipating further downward price movements across major crypto assets. Investors are advised to monitor these signals closely as funding rates often act as a real-time sentiment gauge for the futures
market.