The crypto market has seen prices drop and investors have begun to doubt their abilities. The deposit and withdrawal trends across different crypto exchanges reflect this trend. The funding rates, which have remained relatively flat during the majority of the year 2022, are one of them. There has been some improvement in funding rates, but it’s not for the best.
Inflation in Funding Rates
Over the last week, crypto-exchanges that are well-known have experienced negative funding rates. Binance, ByBit and other top-ranked exchanges have seen their trading volumes rise and are a great place to be for permanent traders. These platforms’ trading volumes can make a difference in market movements.
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For the majority of this month, funding rates fluctuated between neutral and below neutral. However, it seems that the former has finally prevailed. As bitcoin prices dropped to $20,000 last week traders expected that there would be more interest from them. The opposite has happened as it is now showing negative funding rates.
Binance, and ByBit had their average funding rates last week of -0.0015. It is quite a drop in funding rates from the neutral 0.1% average aggregated rate. It is clear that bearish sentiment has grown among perp traders. They have been inclined to short-term traders as a result.
Funding rates turn negative | Source: Arcane Research
This comes on the heels open interest hitting a new peak. Many of these have been generated by Binance as well as ByBit. These metrics show that short traders can be much more active than long-term counterparts.
The Crypto Sentiment is Still Negative
Not only are crypto perp traders bearish, but so are many others. Investors have been choosing to keep their cards close to their chests than usual in the crypto market. The Fear & Greed Index puts the crypto market sentiment in the extreme fear territory for another day yet again. This means that two months in succession have been closed with extreme fear sentiment.
Source: Crypto Total Market Cap on TradingView.com| Source: Crypto Total Market Cap on TradingView.com
The ratio of exchange outflows to inflows has fallen in recent days. The ratio of outflows and inflows indicates that investors refuse to take on any market risk. Bitcoin’s net flows came out to -$29.7 million after outflows had touched $901.6 million for the past day, according to Glassnode.
📊Daily Exchange Flow on the On-Chain#Bitcoin $BTC
➡️In: $872.0M
⬅️$1901.6M
📉 Net flow: -$29.7M#Ethereum $ETH
➡️$261.0M
⬅️$211.2M Out
📈 Net flow: +$49.8M#Tether (ERC20) $USDT
➡️$221.3M
⬅️$27,1M
📈 Net flow: +$14.2Mhttps://t.co/dk2HbGwhVw— glassnode alerts (@glassnodealerts) July 1, 2022
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As investors have been putting less money in exchanges for tokens, Tether flows remain muted. The positive net flow for the day was $14.2million. The market is also being dragged lower by the continued sell-offs.
Featured image taken from Analytics Insight. Charts from Arcane Research and TradingView.com.
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