Crypto Market Struggles Amid Negative Funding Rates, Trump Tariffs

The cryptocurrency market has been experiencing increased strain this week, with several factors weighing heavily on sentiment. These include ongoing macroeconomic headwinds, persistently negative derivative funding rates, and declining altcoin momentum. The funding rates for both centralized exchanges (CEX) and decentralized exchanges (DEX) are in agreement, signaling a lack of bullish conviction in the crypto market. This alignment in funding rates suggests that traders are not optimistic about the near-term prospects of cryptocurrencies, as both types of exchanges are experiencing similar bearish conditions. The funding rates, which reflect the cost of holding leveraged positions, are currently indicating that traders are more inclined to short rather than long cryptocurrencies. This bearish sentiment is further supported by the fact that the funding rates have been consistently negative, meaning that traders are willing to pay to maintain short positions. This lack of bullish conviction is a significant development, as it suggests that the crypto market may be in for a period of consolidation or even a correction. Traders and investors should be cautious and consider adjusting their strategies accordingly.

Data from Coinglass shows a consistent trend of negative or near-zero funding rates across both centralized and decentralized exchanges. Funding rates dropping below 0.005% are often interpreted as a bearish indicator, suggesting short positions are dominant and traders holding them are willing to pay a premium. Looking at specific assets, ETH shows a funding rate of just 0.0066% on Bitget and -0.0031% on Vertex, a sign of market indecision with a slightly bearish tilt. SOL sees a mixed bag, with 0.0100% on Bitget—bullish—but -0.0062% on Vertex, reflecting hesitation. DOGE, a high-volatility asset, shows funding as low as -0.0104% on Vertex and -0.0655% on Crypto.com, signaling high short interest and potential for volatility. While these conditions could spark sudden reversals like short squeezes, the current prevalence of neutral-to-bearish rates points to a market lacking strong bullish conviction and potentially liquidity.

Bitcoin now trades around $82,000.60, roughly 9% spike in the past 24 hours, but nearly 2% on the week. The top cryptocurrency, though, is battling resistance at its 20-day EMA ($82,213) and its RSI hovers at 36.45, indicating it’s approaching oversold conditions. The recent plunge below $75,000—for the second time this week—came after Donald Trump’s 104% tariff on China took effect, rattling global markets. This policy escalation triggered a risk-off mood, affecting both equities and crypto assets. Adding to the selling pressure, institutional flows have turned negative. The BlackRock iShares Bitcoin Trust (IBIT) offloaded 3,296 BTC, contributing to $326 million in net outflows across all US Bitcoin ETFs—marking the third-largest outflow since inception.

The total crypto market cap excluding Bitcoin, currently at $883.64 billion, shows signs of entering a historically oversold zone, as seen in the Bollinger Bands and RSI indicators. The RSI is sitting below 30, which often acts as a short-term bottoming signal. Volume remains high, suggesting capitulation may be underway. The lower Bollinger Band is flattening while price hovers near its support, hinting at a potential bounce towards $997.59 billion. If the altcoin market fails to reclaim the midline (20-day SMA), further downside toward $850 billion or even $800 billion remains likely. On the flip side, a confirmed reversal could push the market cap back toward the $1 trillion resistance.