 ▲ Ethereum (ETH) |
As Ethereum’s (ETH) funding rates across major exchanges have simultaneously turned negative, signaling peak market pessimism, investors’ extreme fear is being interpreted instead as a potential historical bottom-buying signal.
According to cryptocurrency-focused outlet NewsBTC on February 8 (local time), funding rates in the Ethereum perpetual futures market entered negative territory on major exchanges including Binance, creating the unusual situation in which short-position holders pay fees to long-position holders. This reflects an extreme contraction in market sentiment and is typically viewed as a precursor to a short squeeze—a rebound driven by buying pressure as short positions are liquidated or covered after excessive declines. Over the past week, Ethereum has undergone a harsh correction, plunging 28% to around $2,110.
Behind the price decline are large-scale institutional outflows through Ethereum spot ETFs and subdued on-chain activity. U.S.-listed Ethereum spot ETFs recorded net outflows totaling $447 million over the past five trading days, while decentralized exchange (DEX) trading volume has slumped 47% compared with last October, remaining at around $52.8 billion. The drop in network usage has weakened the burn mechanism that reduces Ethereum’s supply, adding to downward pressure on prices.
Technical indicators suggest that Ethereum is struggling to form a base in deeply oversold territory. The market value to realized value (MVRV) ratio has fallen to -37%, its lowest level in three years, indicating entry into what is often described as a “blood in the streets” phase filled with capitulation. The relative strength index (RSI) also remains in the mid-30s, well below the neutral 50 level, confirming that sellers still hold strong dominance over the market.
Interestingly, in contrast to the sharp price decline, the network’s fundamentals are actually strengthening. Over the past week, the number of new addresses on the Ethereum network surged by 37%, with around 380,000 new wallets created daily, marking the fastest growth in six months. This divergence between price and network growth suggests that the current downturn is driven more by macroeconomic uncertainty than by a collapse in fundamentals, implying that Ethereum may be undervalued from a long-term perspective.
For Ethereum to fully break its downward trend, reclaiming the psychological resistance level of $2,450 with strong trading volume will be essential. The direction of Bitcoin (BTC), which is currently testing the $60,000 support level, along with U.S. macroeconomic indicators, is expected to be a key variable determining the pace of Ethereum’s recovery. Market experts advise that while negative funding rates can serve as a powerful buy signal, lingering macroeconomic risks warrant a cautious, phased buying approach.
*Disclaimer: This article is for investment reference only, and no responsibility is accepted for investment losses based on its content. The information should be interpreted solely for informational purposes.*