Definition ∞ Cycle low funding refers to periods where the funding rates for perpetual futures contracts in cryptocurrency markets reach exceptionally low or negative values, often signaling extreme bearish sentiment. Funding rates are periodic payments exchanged between long and short positions to keep the perpetual contract price close to the spot price. Sustained low funding rates can indicate a significant reduction in speculative long positions and a prevalence of short interest. This metric helps analysts gauge market sentiment and potential turning points.
Context ∞ Observing cycle low funding is crucial for understanding market sentiment during downturns or accumulation phases in cryptocurrency news. It often accompanies periods of significant price corrections or extended consolidation, where traders anticipate further declines. A critical future development to watch involves how funding rates react to macroeconomic shifts and regulatory changes, influencing the overall leverage within digital asset derivatives markets.
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