After the Merge, Ethereum funding rates suffered. The Merge was the most anticipated network upgrade and had adversely affected funding and price. As the market settles into Ethereum’s new norm of being a proof-of stake network, however, the markets are slowly stabilizing. A key factor is the return to pre-Merge funding rates.
Funding Rates Stabilizing
It was extremely volatile in the crypto market during the days that led up to the Ethereum Merge. Ethereum had to bear the brunt, even though there was positive movement in the days before the upgrade, things quickly turned around.
The Merge caused a plunge in Ethereum funding rates. The Merge brought it down from trending at just below neutral levels of around negative 0.022% to negative 0.355% when the upgrade was completed. This also follows sell-offs which rocked market during the same period. In the days before the Merge, FTX Longs saw a total 9.92% payment by shorts in order to hedge their positions.
ETH funding rates recover | Source: Arcane Research
But the markets began to show signs of recovery shortly after the Merge was concluded. The market recovered from a negative 0.35% decline to a negative 0.02% recovery by September 16. This was evident in the rise of the price for the digital asset. It has maintained its majority of value during this time. This indicates that, despite all the selling of Ethereum assets, many Ethereum owners still have long-term exposure to this digital asset.
Ethereum could recover
It is clear that investors still have a bullish outlook, as funding rates are now back at pre-Merge levels. Even in a bear market, this bullish sentiment will continue to support the price for the digital asset.
It is normal for Ethereum to begin to stabilize after the Merge hype wears off. This allows accumulators to now purchase digital assets without losing too much.
Price of Ethereum falls below $1,300| Source: ETHUSD on TradingView.com
Even though the market is experiencing volatility due to FOMC intervention, support for ETH has continued to rise. This growing accumulation trend is evident in the exchange outflows of the past 24 hours. According to a report by ETH, outflows were 40% more than inflows. data from Glassnode.
If ETH can maintain support at $1,250 this will be a rebound point. If ETH breaks the $1300 resistance successfully, a retest at the $1500 level will be possible within the week.
Currency.com's featured image and charts by Arcane Research and TradingView.com are the sources of this feature.
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