#CryptoMarketPullback

#Web3FebruaryFocus
Funding Rates Turn Red: New Downtrend Warning for Bitcoin and Ethereum

According to Coinglass data, the cryptocurrency market showed a clear bearish trend in funding rates after intraday declines.

The crypto market fluctuated downward once again during the day. Coinglass data indicated that funding rates pointed to a significant bearish dominance in market sentiment. Funding rates for Bitcoin and Ethereum futures contracts turned negative on many exchanges. The chart appears more severe compared to altcoins. Although the outlook for altcoins remains weak, most of the rates stayed in positive territory. Selling pressure was felt more intensely in major pairs.

Funding Rates Turn Negative: Panic Increases in the Market
The funding rate is a mechanism used to maintain balance between long and short positions in perpetual contracts. When the rate goes negative, short position holders pay long position holders. This signals a predominantly bearish sentiment across the market. After the recent intraday pullback, negative rates in Bitcoin and Ethereum contracts spread across almost all major platforms. This outlook triggers the “cut losses first, think later” reflex among investors.

The picture has become clearer for crypto market participants. Risk perception has increased, and demand for hedging has risen. In altcoin contracts, funding rates mostly remained positive. Still, there is no optimistic pricing. A divergence is emerging where heavy selling flows in major pairs are not transferring to altcoins at the same speed. Traders find short positions in major pairs more attractive, while a wait-and-see approach dominates in altcoins. Platform-specific rates are listed in the attached visual.

Selling Pressure in Bitcoin and Ethereum Becomes More Visible
Coinglass data suggests that the bearish trend is intensifying on the Bitcoin and Ethereum fronts. The shift to negative funding rates indicates that short positions are gaining a cost advantage. The inability of prices to respond quickly to each dip fuels expectations of “even lower” in leveraged trading. In short, sentiment is somewhat rushed.

While the funding rate alone does not determine direction, sudden jumps can occur in opposite movements. When crowded short positions are squeezed by buying in the spot market, rapid rises can happen, and negative funding can sometimes act as a contrarian signal. Therefore, investors should monitor not only the funding rate but also open interest, liquidation zones, and price differences between exchanges.