Ethereum futures traders are indicating renewed optimism as funding rates turn positive. The 30-day moving average of funding rates has shown a positive shift, suggesting increasing bullish sentiment among futures traders, according to Julio Moreno, Head of Research at CryptoQuant.
Moreno observed that this recent uptick follows a prolonged decline, signaling that market participants may be turning more bullish. He explained, "In general, positive and increasing funding rates show the willingness of traders to open long positions in the perpetual futures market. It is historically associated with the expectation of higher prices."
Data from Coinglass reveals that Ethereum’s open interest-weighted funding rate has been trending positively since the U.S. Federal Reserve's interest rate cut on September 18, currently standing at 0.0089%. Analysts from QCP Capital have also noted improvements in funding rates across major exchanges, attributing this to the recent rate cut, stating, "Funding rates on major exchanges are improving, and basis yields are becoming more attractive, particularly with the recent interest rate cuts."
The perpetual futures market significantly influences market sentiment and price trends. The shift in Ethereum’s futures funding rates aligns with a broader market rebound; since the U.S. Federal Reserve cut the Federal Funds rate by 50 basis points on September 18, Ethereum has appreciated by over 17%, outperforming Bitcoin, which saw a 10% increase during the same timeframe.
Although the increase in the funding rate's 30-day moving average is a positive sign, Moreno cautioned that this slight increase alone does not guarantee a sustainable price rally.
