Ethereum perpetual funding rates have fallen to all-time lows, showing signs of a completely oversold market. Aggregate funding reached around -0.078%, and the Binance ETH rate hit -0.028%, while ETH trades near $2,110.
Funding rates on Ethereum exchanges fell to historic lows, levels not seen since the FTX collapse in 2022, indicating a dominant short positioning in futures. Open interest remained elevated, reaching approximately $39.19 billion, suggesting the market maintained significant leverage rather than a complete sell-off.
At the same time, spot flows showed some distribution, with US-listed Ethereum spot ETFs registering around $447 million in net outflows in recent days, and the increase in ETH balances on exchanges being viewed as potential selling pressure.
Macroeconomic context and extreme pessimism
US monetary policy developments in January contributed to a risk-averse environment. This environment coincided with disproportionate market movements: a single-session drop that wiped out nearly $300 billion from the total crypto market capitalization and resulted in approximately $2.5 billion in liquidations, with Bitcoin falling below $75,000.
Gold surged to all-time highs above $5,000, and silver roughly doubled in value since October, reflecting the movement of capital away from risky assets.
As for institutions, there were mixed reactions. There were signs of a strong belief that Bitcoin is significantly undervalued and that they were prepared to increase their exposure in the event of further declines, but this conviction has been overridden by short-term macroeconomic pressures.
Given this mix, ETH’s negative funding rate did not translate into an immediate and widespread buying response. Historically, the indicator points to capitulation, but here it coincided with a market with limited liquidity and a risk aversion.
For market participants, the practical takeaway is that there is a contrarian technical signal, but it will likely remain dormant until liquidity and US policy signals improve significantly.
A clearer recovery in Ethereum prices will depend on the easing of macroeconomic headwinds or a restoration of risk appetite among both retail and institutional investors, rather than solely on the funding rate signal.
