- BNB’s funding interest rate turned negative.
- Key indicators on the price chart also suggest a continuation of the decline.
Bearish sentiment has outperformed the Binance Coin market price. [BNB] According to analysis by AMBCrypto, the futures market fell as the funding rate of the coin across crypto exchanges turned negative. coin glass data.
The funding rate is a mechanism used in perpetual futures contracts to ensure that the contract price remains close to the spot price.
If the executed price of an asset is higher than the spot price, a trader holding a long position pays a fee to a trader shorting the asset. When this occurs, the funding rate returns a positive value.
Conversely, if the execution price is lower than the spot price, the short trader will pay fees to the trader holding the long position, resulting in a negative funding rate.
When an asset’s funding rate is negative, it indicates that more traders are holding short positions.
Therefore, there may be more traders expecting the asset price to fall than those buying the asset in the hope of selling it at a higher price.
On April 1st, BNB’s funding rate returned a negative value of -0.013%. Confirming the bearish trend, the coin’s futures open interest has declined slightly so far this month.
BNB futures open interest decreased by 0.16%, according to Coinglass data. We expect this value to plummet further as negative sentiment increases.
Therefore, this could be an indication that more traders are starting to close positions instead of opening new ones.
BNB’s negative funding rate and declining open interest also indicate growing near-term bearish sentiment as market participants expect a decline in the coin’s value.
Things appear to be getting worse in the spot market as well.
An evaluation of BNB’s key indicators on a 1-day chart also shows a bearish trend.
For example, readings from the Directional Movement Index (DMI) showed that the positive directional index (green) was below the negative index (red) at press time.
When these trend lines are arranged this way, it means that the bearish momentum in the market is stronger than the bullish momentum. Traders often take this as a signal to exit a long position and open a short position.
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Additionally, the coin’s MACD line was below the signal line and looked poised to break through the zero line in a downtrend at the time of writing.
Source: BNB/USDT on TradingView
If the MACD line of an asset and the signal line intersect downward, it suggests that sellers will reappear in the market. In the case of BNB, these lines have been positioned as such since his March 19th.
