Ethereum Funding Turns Negative as USDe Burns $1.9B in 24 Hours, May Signal Rapid Deleveraging

• USDe lost $1.9B in a day, equal to about 13% of supply

• Ethereum funding rates moved negative, indicating traders cut long leverage and sought risk reduction.

• Data shows minting collapsed while burns spiked, pushing net USDe supply into negative territory.

USDe burn: $1.9B erased in 24 hours as ETH funding drops — read analysis and next steps for traders.

What caused the USDe $1.9B burn and the Ethereum funding-rate decline?

The USDe burn occurred after a rapid shift to negative Ethereum funding rates, prompting traders to close leveraged longs and triggering mass burning of USDe. Funding turned negative, minted supply fell and burned volumes spiked, removing roughly 13% of USDe in 24 hours and signifying broad deleveraging.

How did funding rates and mint/burn dynamics interact?

Funding rates reflect derivatives market positioning. When the ETH funding rate moved negative, long positions were costly and many traders reduced exposure. As minting slowed and burning accelerated, net supply fell sharply, creating the $1.9B contraction described by analyst Julio Moreno.

USDe burned $1.9B in 24 hours as Ethereum funding turned negative, showing sharp deleveraging and shrinking trader confidence.

• USDe lost $1.9B in a day as traders cut leverage, showing how fast confidence and liquidity can fade in crypto markets.
• Ethereum’s funding rate turned negative, signaling traders closing long positions and shifting toward risk reduction and safety.
• The burn of 13% of USDe’s supply shows a strong market pullback driven by falling demand and heavy liquidation pressures.

A sharp contraction hit USDe, erasing $1.9 billion of supply within 24 hours. analyst Julio Moreno reported, “$1.9 billion USDe burned since yesterday, 13% of total supply, as funding rates turned negative.” This on-chain movement reflects a swift market-wide deleveraging event.

The contraction followed a sustained drop in Ethereum’s funding rate, which prompted traders in derivatives markets to reduce long exposure. On-chain data covering July to early October shows how minting and burning activity evolved alongside funding-rate swings, producing distinct expansion and contraction phases.

In July, USDe minting grew steadily as market sentiment improved. The green segments on chain charts showed newly minted USDe increasing modestly, while ETH funding hovered slightly positive, indicating a preference for leveraged long positions.

Source: Julio Moreno

By mid-August, the trend briefly reversed: burned supply rose and the ETH funding rate moved negative, a clear sign of short-term deleveraging. Demand for leveraged ETH exposure fell, and the market entered a consolidation phase before minting resumed later in August.

When did net USDe supply turn negative and why?

Net USDe supply went negative in early October after burned supply exceeded $1 billion and minting volumes collapsed. This shift coincided with ETH funding declining below –0.02, confirming intensified bearish positioning and liquidation pressures across Ethereum-linked derivatives.

What were September’s market signals?

In September, mint and burn cycles alternated frequently. Funding rates hovered near neutral, suggesting cautious optimism. Brief dips in funding paired with burn spikes indicated intermittent deleveraging, culminating in the early-October contraction when both minted supply and funding rates fell sharply.

Summary table: Mint vs Burn and Funding Trend

Frequently Asked Questions

How large was the USDe burn relative to supply?

Approximately 13% of circulating USDe was burned in the 24‑hour episode, amounting to about $1.9 billion and indicating a rapid contraction in available stablecoin supply tied to the protocol.

How should traders respond to negative ETH funding?

Traders typically reduce leveraged long exposure, monitor liquidation risk and reassess hedges. Negative funding often precedes increased volatility and downward price pressure on ETH-linked derivatives.

Key Takeaways

• Rapid deleveraging: A $1.9B burn removed ~13% of USDe supply, signaling swift risk-off behavior.
• Funding-driven: Negative ETH funding rates pushed traders to close long positions and reduce leverage.
• Monitor metrics: Watch mint/burn volumes, funding rates and liquidation data for early warnings of similar events.

Conclusion

The $1.9B USDe burn and concurrent drop in Ethereum funding rates reflect a decisive deleveraging episode that reduced liquidity and trader confidence. Market participants should monitor on-chain mint/burn flows and funding metrics for signs of renewed stress or stabilization. COINOTAG will continue tracking developments and on-chain indicators for actionable updates.

Author: COINOTAG • Published: 2025-10-11 • Updated: 2025-10-11