The Ethereum update changed the network from Proof-of-Work (PoW) to Proof-of-Stake (PoS). The Ethereum mainnet and the Beacon chain will eventually merge as a single block in the transition.
According to EtherNodes estimates, if there are no fundamental technical problems, the transition of Ethereum will happen. Before now, the team of developers has verified the checklist before releasing the integration.
Lately, there have been many feelings and opinions regarding the merger. This greatly affected ETH and all derivatives in the crypto market. Some participants are hoarding in anticipation of a sudden price increase. But some, fearing the change, are putting away their gains.
Sentiments on mergers affect ETH funding rates
Currently, expectations and more attention are attached to the Ethereum blockchain. But depending on the condition of the mines, there may be a difference in the approximate time of the transition. From the looks of things, ETH futures traders seem to be calculating their moves.
Data from CryptoQuant shows that Ethereum’s funding volume has hit a new all-time low. This latest point represents the minimum for ether derivatives.
The ETH funding rate is a measure that provides a binding price between the contract and the asset. It refers to the payment from long to short or short to long traders. The difference between the asset spot and the underlying futures contract prices provides the cash flow.
Negative value for Ethereum funding rates and implications
CryptoQuant data gives a negative value for Ethereum funding rates. This means that most of the power in the order book goes to the short traders. So they pay long traders accordingly.
Futures traders place great importance on currency rates. This is because these prices act as sudden stimuli and can change their trading position either positively or negatively. As a result, they will make huge profits or suffer huge losses.
Traders who pay high fees often have losses when using high funds. However, such a reversal can occur even when the market is not under the influence of a severe depression. So you can use a fence as a barrier.
A negative value of ETH funding rates indicates that futures traders are currently hedging their position exposure. A major explanation for such results points to integration. Therefore, the traders may be more cautious due to the volatility that may explode after the transition.
Featured image from CNN, chart from TradingView.com