Ethereum Funding Rate At 14-Month Low, What Does it Mean for ETH Price?

The broader stock market and cryptocurrencies are under serious pressure after Fed Chairman Jerome Powell’s speech last Friday. The price of the world’s second-largest cryptocurrency, Ethereum (ETH), fell 12% over the weekend. At the time of writing, ETH is down 2.66% and he is trading at a price of $1,453, giving him a market cap of $177 billion.

Data from CryptoQuant shows that ETH’s funding rate has fallen to negative, hitting a 14-month low. A negative funding rate indicates strong ‘bearish’ sentiment among ETH traders. CryptoQuant explains:

Ethereum’s funding rate is at its lowest level in 14 months, meaning short traders are paying long traders. The last time the funding rate turned negative like this was just before the big Bitcoin and Ethereum short squeeze in July 2021.

Ethereum Inflation Drops

Annual inflation has fallen by 50.77% since the EIP-1559 protocol was implemented last year, 2021. Currently, the amount of ETH burned on the Ethereum network is over 2.6 million. This equates to him $3.76 billion in total at his current ETH price.

However, according to Glassnode data, the total amount of ETH in deposit contracts has reached a one-month low.As report By Glassnode:

The total Ethereum value of ETH 2.0 deposit contracts hit a one-month low of $19,475,077,788.75. The previous one-month low of $19,589,437,125.96 was observed on August 27, 2022.

Growing influence of macro

The price of ETH has witnessed a strong rally above the optimism surrounding the Merge upgrade. From his $1,000 low in June, ETH is up more than 90% before coming back. Now macro factors are taking over by overshadowing Merge’s upgrade optimism.

Last week, Federal Reserve Chairman Jerome Powell said the central bank would not hesitate to raise interest rates further. Powell noted that even if inflation were to drop, it would still be very high for ordinary consumers.

Further quantitative tightening could therefore put more pressure on the stock and cryptocurrency markets.Ethereum growth correlation Changes to the S&P 500 can also affect ETH price.

Bhushan is a FinTech enthusiast and has a great knack for understanding financial markets. His interests in economics and finance focus on the emerging blockchain technology and cryptocurrency market. He is in a continuous learning process and keeps himself motivated by sharing what he has learned. In his free time, he reads thriller novels and sometimes develops his cooking skills.

The content presented may contain the author’s personal opinions and is subject to market conditions. Do market research before investing in cryptocurrencies. The author or publication accepts no responsibility for your personal financial loss.