Ethereum Funding Rate Stabilization Suggests Recovery Could Be On The Way

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Ethereum funding rates had been beaten after the merger. This event was the most anticipated upgrade in the network’s history, and it affected both pricing and funding rates negatively. However, as the market begins to settle into the new normal of Ethereum as a proof-of-stake network, things are starting to stabilize. One is the return of funding rates to pre-merger levels.

Stabilization of financing rates

The days leading up to the Ethereum merger were extremely volatile for the crypto market. Ethereum itself had paid the price, and while the days leading up to the upgrade were filled with positive moves, that quickly changed.

Ethereum funding rates dropped following the merger. It went from trending just below neutral levels of around minus 0.02% to minus 0.35% by the time the upgrade was final. This also comes on the heels of the sell offs that rocked the market at the same time. In the days leading up to the merger, FTX longs had seen a total of 9.92% paid by shorts to cover their exchange positions.

Ethereum funding rate

ETH funding rates recover | Source: Arcane Research

However, shortly after the merger was completed, the market began to recover. This recovery was just as sharp as the decline, going from minus 0.35% to around minus 0.02% on September 16th. This strong upward trend was manifested in the price of the digital asset, which maintained most of its value during this time. This shows that despite the sales, there are still a significant number of Ethereum holders who maintain long exposure to the digital asset.

Ethereum could recover

With funding rates returning to pre-merger levels, it shows that there is still bullish sentiment among investors. This sustained bullish sentiment continues to support the price of the digital asset even during the bear market.

Since most of the selling happened due to the hype around the merger, it’s only fitting that Ethereum started to stabilize once most of that hype died down. This leaves the accumulators at a point where they can buy the digital asset without sacrificing too much of their previous value.

Ethereum Price Chart from TradingView.com

ETH price drops below $1,300 | Source: ETHUSD on TradingView.com

Even now, with FOMC-inspired market volatility, support for ETH continues to build. FX outflows over the past 24 hours show this growing trend of accumulation. Outflows were around 40% higher than ETH inflows for the day, according to Glassnode data.

If ETH is able to maintain its support level at $1,250, this point will serve as a rebound point for the digital asset. If ETH successfully breaches the $1,300 resistance, a retest of the $1,500 level is possible next week.

Featured image from Currency.com, charts from Arcane Research and TradingView.com

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