Funding rates for Ethereum perpetual contracts have risen to levels seen before the global liquidation in early August, as noted by The Block.
According to Coinglass, on October 15, the rate reached 0.012%, nearing the figures from July 29.
At that time, Ether was trading around $3316 before cryptocurrencies plummeted alongside stocks in early August. Ethereum prices fell by 22%.
The crash was largely attributed to the global stock market’s reaction to the Bank of Japan’s unexpected interest rate hike, which led to a retreat in yen trading.
Derivative trader Gordon Grant noted in an interview that external shocks affecting crypto assets could have been exacerbated by highly leveraged futures.
He believes that changes in the “topography” of the perpetual contracts market indicate increased vulnerability of digital currencies to exogenous factors. These could include a potential correction in Nvidia’s stock price, a slowdown in China’s stock market growth, or tensions in the Middle East, the expert cited as examples.
These factors, combined with the current level of leverage in the crypto market, could trigger or amplify a sharp, albeit brief, decline. An additional aspect in such a scenario could be a large-scale liquidation of options, the trader suggests.
In September, analysts at QCP Capital noted a shift in the options market interest from puts to calls. Experts linked this to the economic stimulus measures announced in China.