Markets Tend to Fall into a Deep Bearish Trap-Traders to Short Bitcoin & Ethereum

The stagnant crypto markets have compelled traders to rethink the upcoming price trend. While the possibility of a fresh upswing has been rooted out for some time due to FTX-collapse, the traders now are shorting the top 2 cryptos. Due to this, the entire crypto market may be negatively impacted and may also mark new lows before the end of 2022, maybe by the end of November 2022. 

Recently, the funding rates have gone extremely negative, which is enough to create a market depression before the possibility of any reversal. According to an on-chain data provider, Glassnode, Bitcoin is currently the second most shorted token, while Ethereum follows the leader and is the third on the list. 

It has to be noted that throughout the bull run in 2021, the funding rate was highly positive but slashed as the bear market kicked off. The current bear market has invited huge negative interest, which indicates the market participants believe the BTC price is prepared for a fresh rally towards the south. This rise in the negative funding rates is the second highest since January 2020.

On the other hand, Ethereum’s funding rate has also turned extremely negative, mainly after the recent market crash. The funding rate had been extremely negative, recently in September, after the merge event, marking the highest levels. Meanwhile, since then the rates remained largely negative with a couple of minor recoveries also noticed.

But the current drop in rates has also dragged huge volume, meaning a huge chuck of traders has joined the short-army. 

Presently, the deepest drop in the funding rate is witnessed within the top 2 cryptos in history. However, the bulls usually jump in at the bottoms, and this is when the short positions are reversed and also liquidated. Therefore, these negative funding rates are expected to prevail for a long time, which may further attract many more strong hands to uplift the rally ahead.