Ethereum futures funding rate turns negative…risk appetite deterioration deepens

Investor sentiment is clearly weakening as the funding rate in the Ethereum (ETH) futures market has flipped into negative territory. With a price pullback, large-scale liquidations and institutional outflows overlapping, a more cautious tone appears to be spreading across the broader market.

According to Cointelegraph on the 21st (local time), Ethereum has fallen about 13.8% over the past three days, retesting the $2,900 support level for the first time in four weeks. As risk-off sentiment strengthened across global financial markets, the crypto market also underwent a synchronized correction. Ethereum later recovered the $3,000 level after U.S. President Donald Trump withdrew plans to raise tariffs on some European Union countries, but analysts say uncertainty remains too high to call it a trend reversal.

Volatility has risen in particular as roughly $480 million worth of leveraged long positions were liquidated over the past two days. During this period, the annualized funding rate for Ethereum perpetual futures briefly dipped below zero. That structure means short-position holders are the ones who pay funding—a signal that typically emerges when bearish sentiment becomes widespread.

Still, some analysts say the likelihood that a negative funding rate will immediately translate into a rebound is limited. The market is also viewing continued outflows from Ethereum spot exchange-traded funds (ETFs) as a headwind, as institutional demand has cooled. U.S.-listed Ethereum ETFs now hold more than $17 billion in assets, which is seen as a potential source of selling pressure.

In fact, Ethereum ETFs recorded net outflows of about $230 million in a single day recently, reversing the prior week’s average net inflow trend. Some listed companies that have held Ethereum as a reserve asset are also said to be facing the burden of accounting losses tied to the price decline.

Defensive positioning is also intensifying in the options market. The one-week Ethereum options delta skew is around 11%, the highest level in the past seven weeks. This indicates a sharp increase in demand for put options as downside protection. Rather than an aggressive bearish bet, it is interpreted as reflecting caution over repeated price resistance around $3,400 and a slowing in fundamentals.

Market participants say that for Ethereum to reclaim $3,400, it would first require an improved macro backdrop, clearer results from artificial intelligence infrastructure investment, and easing geopolitical uncertainty. With demand for leverage-driven bullish positioning constrained, the view is that the odds of a meaningful, trend-following rebound in the near term are not high.