The cryptocurrency market is grappling with a wave of bearish sentiment, as funding rates on both centralised exchanges (CEX) and decentralised exchanges (DEX) continue to hover below the critical 0.005% threshold. This trend reflects a strong tilt towards short positions across the board, indicating traders are betting on further declines in digital asset prices.
Funding rates, a key mechanism used in perpetual futures trading, are designed to keep the contract price aligned with the spot price of an asset by incentivizing traders on one side of the market. When funding rates rise above the 0.01% baseline, it suggests a bullish market dominated by long positions. Conversely, rates below 0.005% indicate bearish sentiment, with short sellers firmly in control.
This bearish pattern has become entrenched, with rates staying negative through the weekend and into Monday, underscoring the market’s pessimistic mood.
XRP Faces Pressure After SEC Settlement Stalls
Among the hardest-hit assets is XRP, which has seen renewed selling pressure following the news that Ripple’s settlement talks with the U.S. Securities and Exchange Commission (SEC) have stalled. XRP is trading around $2.15, down sharply as traders lose confidence in a near-term resolution to the prolonged legal dispute.
The negative funding rates on XRP perpetual contracts highlight that traders are overwhelmingly betting against the token’s short-term recovery. The stalled SEC case has clouded XRP’s regulatory outlook, further dampening investor appetite.
Chart patterns for XRP confirm the strong downtrend, with labelling errors like “bullish” on clearly bearish charts adding confusion but failing to hide the underlying weakness.
Celestia, Stellar, and Waves Join in the Decline
The bearish sentiment is not limited to XRP. Celestia (TIA) has experienced one of the steepest drops, plunging 9% intraday to trade at approximately $1.45. This sharp move suggests extreme bearishness among traders and signals that a reversal is unlikely in the near term.
Stellar (XLM) is also feeling the heat, trading at $0.2369 amid the market-wide downturn. Meanwhile, Waves (WAVES) has shed 3.24% over the past 24 hours, with its price falling to $0.9531. These declines across multiple assets reinforce the broader bearish trend sweeping the crypto landscape.
Technicals Underscore Persistent Downtrend
Chart analyses across major cryptocurrencies support the bearish case. The persistent downtrend lines and repeated lower lows in price movements confirm that sellers are in firm control. The funding rates’ prolonged stay below the bullish threshold of 0.01% underscores the reluctance of traders to bet on a recovery, while the dominance of shorts suggests that any rally attempt could face stiff resistance.
This gloomy backdrop has led many traders to question when the market might find a bottom. For now, both the technical and fundamental indicators point to continued weakness.
Investors Brace for Prolonged Bear Market
The current crypto environment stands in stark contrast to the euphoric rallies of recent years. While bullish cycles were once characterised by funding rates soaring above 0.01%, the present sub-0.005% figures signal a market that remains deeply cautious if not outright fearful.
Adding to the unease are broader macroeconomic headwinds, including inflation concerns and regulatory uncertainty, which are weighing on risk assets globally. For XRP holders, the uncertainty surrounding Ripple’s unresolved legal battle continues to cast a long shadow, making it difficult for bulls to muster sustained momentum.
A Market Searching for a Catalyst
As of now, there are no clear signs of a near-term reversal. With funding rates stuck in bearish territory and key assets like XRP, Celestia, and Waves showing sustained weakness, the crypto market appears poised to extend its downtrend.
Unless a positive catalyst such as regulatory clarity or macroeconomic easing emerges, traders should brace for continued volatility and a market sentiment that remains firmly in the bears’ grip.
The coming days will be crucial for determining whether cryptocurrencies can break free from this negative cycle or if the bearish sentiment will deepen, testing the resilience of investors and projects alike.
