Ethereum funding rates turn negative…demand for bearish positions grows

YM Lee

Summary

An analysis said that in Ethereum (ETH) derivatives markets, funding rates turning negative and rising demand for short positions indicate bearish investor sentiment remains in place.
It noted that institutional appeal is constrained by a slowdown in Ethereum on-chain activity, a decline in mainnet fee revenue, net outflows from spot ETFs, and a 2.8% staking yield.
However, given the options market’s delta skew near the neutral range and puts trading at a 7% premium, it said conviction in a strong near-term break above $2,200 is low, though the market is not showing signs of rapid deterioration.

Forecast Trend Report by Period

An analysis suggests that funding rates in Ethereum (ETH) derivatives markets have flipped negative, boosting near-term demand for bearish positions.

On the 10th (local time), Cointelegraph reported that annualized funding rates in the Ethereum perpetual futures market recently fell into negative territory, driving increased demand for short positions. The metric is typically considered neutral in the 6%–12% range, but it has remained consistently below that band over the past month.

Over the past month, Ethereum’s price has failed to hold steadily above $2,100. With investor sentiment weakening, demand for leverage-driven bullish positions also appears limited. While ETH has rebounded about 7% over the past two days, analysts say broader market optimism has yet to recover meaningfully.

A slowdown in on-chain activity was also cited as a headwind for price action. Over the past month, weekly fee revenue on the Ethereum mainnet averaged about $2.3 million, down sharply from roughly $8 million in early February. As of the 7th, however, transaction counts held relatively steady at around 14 million.

Institutional flows have also softened somewhat. Ethereum spot exchange-traded funds (ETFs) posted net outflows of about $225 million from Thursday through Monday. That followed net inflows of about $169 million the prior Wednesday, indicating the trend has reversed again.

Staking yields were also flagged as a factor limiting institutional appeal. Ethereum’s native staking yield currently stands at about 2.8%. By contrast, stablecoin-based yields—such as those offered via Sky Lending (formerly MakerDAO)—are higher at around 3.75%.

Still, the options market did not show extreme bearish signals. Ethereum’s options delta skew hovered near the neutral range of -6% to +6%. Put options traded at roughly a 7% premium to calls, but analysts said this does not indicate fear has broadly intensified.

Cointelegraph concluded that “taken together, derivatives indicators and on-chain activity suggest there is low conviction that Ethereum will decisively break above $2,200 in the short term,” while adding that “there are still no clear signs that market conditions are deteriorating sharply.”

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