CEX, DEX Funding Rates Paint a Bearish Picture for the Market

• The CEX and DEX funding rates have turned negative and continue to fall.
• The funding rate of BTC on Binance was -0.0094% while on dYdX was -0.0006%.
• Bitcoin was trading at $58,035.63, up 2.6% in the past 24 hours.

Funding rates across major centralized and decentralized crypto exchanges have taken a nosedive, suggesting the digital asset space could face another crash soon as capital inflows slow down.

Data from Coinglass reveals that in the past 24 hours, the funding rate of Bitcoin on Binance was -0.0094%, while on dYdX it was -0.0006%, indicating a bearish sentiment in the perpetual swaps market. Over the last seven days, the funding rate of Bitcoin on Binance was -0.0614%, on OKX was -0.0055%, on dYdX was 0.1457%, on Bybit was 0.0636%, and on Bitget was 0.0718%.

A negative funding rate occurs when traders with short positions pay a fee to those with long positions. The reverse is true for a positive funding rate. These payments help maintain market equilibrium.

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When funding rates are negative, investor sentiment tends to be bearish because it signals that a majority of traders have short positions, which can precede a market crash. Coinglass data confirms that in the past 30 days, funding rates across DEXs and CEXs have experienced rapid fluctuations.

Market Performance Remains Sluggish

Alongside declining funding rates, the trading volume of major digital assets in the crypto market has also significantly decreased from the bullish levels seen in March this year when Bitcoin (BTC) reached a new all-time high at $73,750. Currently, according to CoinMarketCap data, BTC is trading at $58,035.63, up 2.6% in the past 24 hours.

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The leading digital asset is up 1.79% over the past week but is down 2.32% in the past 30 days. However, Bitcoin is up a substantial 124.62% since September 2023. Interestingly, multiple industry leaders have predicted that BTC will become bullish in the fourth quarter of the year.