Key Insights:
- Funding rates have dropped to the lowest point since the 2022 bear market.
- The current reset aims to reduce excessive leverage in the crypto market.
The crypto market has recently experienced one of the sharpest leverage flushes in its history, leading to a major reset in funding rates. These rates have dropped to levels last seen during the 2022 bear market, specifically the FTX crash.
This reset has led to the liquidation of excessively long positions, clearing out some of the speculative risks that had accumulated in the market. The sharp decline in funding rates indicates that excessive leverage has been wiped from the system, which many market participants believe will help create a healthier environment for future trading.
The reduction in leverage often follows periods of high volatility and suggests that the market is undergoing a necessary correction. “This reset sets the stage for more stability and less overexposure in the market,” one expert stated. As funding rates stabilize, traders may find more predictable conditions moving forward.
