Ether’s funding rate soared to an 8-month high, but is it a sign of a strengthening rally or an impending price correction?
Ether (ETH) price surged to $3,444 on Nov. 12, its highest level since July. This rally followed Bitcoin (BTC), which hit an all-time high of $89,957 before adjusting to $87,000 on Nov. 12. Traders are now questioning whether excessive leverage in Ether futures could increase the risk of further ETH price correction below $3,200.
Ether 8-hour funding rate. Source: Laevitas.ch
Perpetual futures, also known as inverse swaps, carry an embedded fee to balance out excessive leverage demand. When market sentiment is overly bullish, the funding rate becomes positive. However, rates up to 2.1% per month are considered neutral, as cryptocurrency traders tend to be naturally optimistic.
