3 reasons why Bitcoin traders keep a close eye on the futures funding rate
Analysts frequently correlate a high perpetual futures funding rate with market crashes, but is this the best way to analyze the metric? Futures contracts trading has grown immensely over the past year, and proof of this comes from the total rise in open interest. Open interest is the total number of outstanding contracts, and the figure has risen from $3.9 billion to the current $21.5 billion in six months, a 450% increase.Sometimes traders assume that a high or low funding rate and soaring open interest indicate a bullish market, but as Cointelegraph has explained before, this is not the....
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Crypto prices are down across the board but a surge in DeFi sector growth appears to be pushing Compound’s COMP token higher. The price of COMP, the governance token of the decentralized finance (DeFi) giant Compound, has been surging while the wider crypto market has entered a correction. Despite the ongoing cryptocurrency market slump, the token has rallied 56% in the past week.COMP/USDT 4-hour chart. Source: TradingView.comUnusually low funding rate and spot market accumulationThere are various potential reasons behind the sudden rally of COMP. Traders have pinpointed the unusual market....
Competitor blockchains, a slowdown in daily transactions and flat-lined TVL are a few challenges facing BNB, but data suggests Binance Coin is still a contender. Binance Coin (BNB) holders enjoyed a 1,760% rally from $37 to $692 between January and May 2021, but as is customary in crypto, this surge was followed by a 69% correction two weeks later. From there, it’s been a bit of a rough patch to regain investors' confidence and BNB failed to produce another all-time high in November even though the aggregate cryptocurrency market capitalization peaked at $3 trillion.Binance Coin / USDT at....
The funding rate of Bitcoin dropped to a level unseen since September 2020, signaling fear in the market. The funding rate of Bitcoin (BTC) has dropped to levels not seen since September 2020 as the price of Bitcoin plummeted below $52,000 on April 18. Quant trader and analyst Lex Moskovski says it shows fear has returned to the market.According to the data from Glassnode, the average Bitcoin futures funding rate across all exchange dropped to as low as around -0.03% on SundayWhat is funding rate and why does it dropping matter?Bitcoin futures exchanges use a mechanism called "funding" to....
The funding rate for MATIC and AAVE is currently rewarding traders who are leveraged longs, but it might not last for long. Data shows that AAVE and Polygon (MATIC) traders are currently being paid up to 4.3% per week to long future contracts.In the crypto markets, traders are usually bullish, or at least the majority of retail investors are. This causes an interesting phenomenon as it incentives arbitrage desks and whales to sell futures contracts while simultaneously buying on regular spot exchanges.Crypto total market capitalization, USD billion. Source: TradingViewThe above chart shows....
Data shows pro traders are heavily accumulating the current dip in Bitcoin price while retail investors are occupied with trading altcoins. Bitcoin (BTC) has been struggling to sustain the $55,000 support level for the past 16 days, or basically since the April 17 record-high $5 billion long contracts liquidation. The rejection that took place after the $64,900 all-time high had a devastating impact on the sentiment of retail traders, as measured by the perpetual futures funding rate significant drop.However, despite Bitcoin's recent underperformance and today's 6.5% drop, pro traders have....