Bitcoin Bulls, Be Ready to Pay More As Funding Rate Jumps to 66%

The post Bitcoin Bulls, Be Ready to Pay More As Funding Rate Jumps to 66% appeared first on Coinpedia Fintech News

In a historic move, Bitcoin surpassed the $45,700 mark, marking a celebratory moment for the crypto community. However, the journey to these heights has come at a cost, as long positions and bullish bets in the perpetual futures market reach unprecedented expense levels.

Funding Rates Hit 66%

Matrixport’s data tracking reveals an all-time high of 66% annualized global average perpetual funding rates during Asian trading hours. However, Perpetual futures, characterized by their absence of expiry dates, employ the funding rate mechanism to align prices with the prevailing market value of the cryptocurrency. 

Meanwhile, the positive funding rates indicate a premium for perpetual over the spot price, with long positions paying shorts to maintain their positions. 

In addition, Matrixport’s head of Research and Strategy Markus Thielen recently commented on the recent increase in funding rates to 66%, which indicates that longs are willing to pay short to stay in the market.

Bullish Momentum Despite Holiday Season

Despite the festive period, crypto traders have maintained a notably bullish outlook, anticipating a potential Bitcoin ETF approval. Markus Thielen remarks on this phenomenon, stating, “Surprisingly, the bitcoin funding rate has remained elevated during the holiday period, indicating that crypto traders have stayed very bullish and expect an imminent bitcoin ETF approval.”

While the surge in funding rates underscores the prevailing bullish sentiment, market participants must exercise caution. Historically, super-high funding rates can become burdensome for longs when the market ceases its upward trajectory, often leading to the unwinding of bullish positions and subsequent price pullbacks.

What Lies Beyond $45,000?

As the Bitcoin rally shows no signs of slowing down, trading comfortably above $45,719, the cryptocurrency continues to defy expectations. The remarkable 56% surge in the final quarter of 2023, fueled by speculations around potential approvals of spot-based BTC exchange-traded funds by the U.S. Securities and Exchange Commission, has set the stage for a suspenseful start to the new year.