TronWeekly

Crypto World News

You are here: Home / Archives for Funding rate

Funding rate

Bitcoin Funding Rates Surge: Bullish Momentum Building Up

by

In a crucial development, the funding rate of Bitcoin on key exchanges such as DyDx and Deribit is rapidly surging. Funding rates are a key metric to gauge market sentiment in the cryptocurrency derivatives market, as they indicate the cost of holding long positions versus short positions. With BTC hitting above $63k, the funding rates highlighted “more longs,” indicating that more traders are betting on the price of Bitcoin going up, Santiment noted.

In short, traders are beginning to feel more optimistic about the future price of BTC and are more willing to buy the coin or hold onto their existing holdings. This is significant because it could lead to increased buying activity. However, a high funding rate also indicated an overheated market and the potential for a price correction, suggesting that long positions are paying a significant premium over short positions.

Bitcoin’s funding rate is rising on exchanges like DyDx and Deribit. To avoid history repeating itself after last week’s top, those bullish on crypto want to see BTC FOMO staying low, with shorts opening at the same [or higher] rate than longs.

After last week’s market top, there is a growing sentiment that history should not repeat itself. To prevent a potential downturn, proponents of the bullish trend in crypto are hoping to see a low level of Fear of Missing Out [FOMO] surrounding Bitcoin, coupled with short positions opening at the same rate or even higher than long positions. Given the latest funding rates, traders are closely monitoring the market for signs of potential reversals.

Bitcoin: $64K Level Crucial for Potential Upside Move

According to Nebraskangooner, BTC is currently in a consolidation phase, with traders eyeing the $64K level, as a break above could open up the potential for a rally towards the $70K area and possibly higher. However, a break below the current range could lead to a retest of support levels, though some analysts believe any downward move could be short-lived, expecting a quick rebound back into the chop zone.

Bitcoin
Bitcoin Funding Rates Surge: Bullish Momentum Building Up 2

The market sentiment remains mixed, with some traders cautious about the possibility of a breakdown, while others remain optimistic about a breakout. The current price action is reminiscent of previous choppy periods in Bitcoin’s history, highlighting the cryptocurrency’s ability to remain resilient in the face of uncertainty.

Bitcoin Future Traders Are Not Bullish Despite Recovery Above $56K

by

After an impressive run, Bitcoin fell close to $50K as the cryptocurrency industry saw one of the most damaging corrections this bull season. Despite the fact that the crypto-asset recovered quickly and was trading at $56,859 at the time of writing, derivative traders are not optimistic about its price action.

This was because the funding rate of Bitcoin slid to a 7-month low which, in turn, triggered massive uproar in the market. The figure was in the negative zone, a level last seen in September 2020 when the crypto-asset was priced around $10K.

Revealing the same, Lex Moskovski, the CIO of Moskovski Capital tweeted,

“Wow, it’s been a long time since we’ve seen funding this negative. Fear.”

Twitter
Bitcoin Future Traders Are Not Bullish Despite Recovery Above $56K 4

What Does Negative Bitcoin Funding Rate Mean?

Funding rate essentially demonstrates the premium that futures traders have to pay [or receive] to order for them to keep a position open.

A negative funding rate, on the other hand, implied that a majority of investors are shorting or selling, which was further indicative of a rising sentiment of fear in the BTC market. In short, more contracts were found to be betting against Bitcoin’s price rising than contracts betting in favor of it.

On the contrary, a funding rate on the positive in Bitcoin derivatives markets signifies that investors with long positions pay those with short positions. The funding rate spikes have historically coincided with a strong optimism and high leverage from short-term trader.

For instance, the funding rates had previously regained some upward momentum in the last week March similar to the final weeks of January and February.

The market sentiment has flipped rapidly. This was observed from the fact that ahead of the much-awaited Coinbase’s listing on Nasdaq, Bitcoin’s funding rate was neutral at 0.1%-0.15% in larger derivative platforms such as Binance. The world’s largest crypto-asset soared to an ATH as many traders continued to long or buy it Bitcoin, thus overheating the futures market.

Soon after Coinbase went public, Bitcoin noted a double-digit crash from above $60K to a little over $50K which was enough to send panic among investors that use high leverage across major exchanges. The cascading liquidations during this pullback even eclipsed that of the Black Thursday crash of March 12, 2020.