Ethereum funding rates had taken a beating after the merger was completed. This event was the most anticipated single upgrade in network history and negatively affected both pricing and funding rates. However, as the market begins to adjust to the new normal of Ethereum as a proof-of-stake network, things are starting to level off. One of them is that financing rates return to pre-merger levels.

Stabilization of financing rates

The days leading up to the Ethereum meltdown had been extremely volatile for the crypto market. Ethereum itself took the brunt of this, and while the days leading up to the upgrade were full of positive movement, it turned around quickly.

Ethereum funding rates plummeted on the back of the merger. It fell from trending just below neutral levels around negative 0.02% to negative 0.35% when the update was final. It also follows the sell-off that rocked the market at the same time. In the days leading up to the Merger, FTX longs had seen a total of 9.92% paid by shorts to cover their positions on the exchange.

ETH funding rates recover | Source: Arcane Research

However, not long after the Merger was finalized, the market began to recover. This recovery was as strong as the drop, returning from negative 0.35% to around negative 0.02% on September 16. This strong uptrend was shown in the price of the digital asset, which held most of its value during this time. This shows that despite the sell-off, there are still a significant number of Ethereum holders who maintain long exposure to the digital asset.

Ethereum could recover

With funding rates recovering to pre-merger levels, it shows there is still bullish sentiment among investors. This sustained bullish sentiment continues to underpin the price of the digital asset even through the bear market.

Since most of the liquidations occurred due to the hype around the merger, it is only natural that Ethereum has started to stabilize once most of that hype has faded. It leaves hoarders at a point where they can buy the digital asset without sacrificing its previous value too much.

ETH Price Drops Below $1,300 | Source: ETHUSD on TradingView.com

Even now, with FOMC-inspired market volatility, support for ETH continues to rise. The currency outflows of the last 24 hours show this trend of increasing accumulation. Outflows were about 40% higher than ETH inflows for the day, according to glass node data.

If ETH can hold its support level at $1,250, this point will serve as a bounce point for the digital asset. If ETH successfully breaks above the $1,300 resistance, a retest of the $1,500 level is possible in the coming week.

Featured image from Currency.com, charts from Arcane Research and TradingView.com

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