Funding Rates Tanked on Exchanges, Indicating a Steep Discount in Bitcoin Perpetual Futures
Funding rates in bitcoin (BTC) perpetual futures listed worldwide crashed late Thursday after a sudden price slide put the recently popular short volatility bets at risk. This indicates a steep discount in bitcoin perpetual futures.
Main Breakdowns:
- Funding rates on OKX, Deribit, and Bybit crashed to -10% and more in annualized terms on Thursday.
- Bitcoin DVOL, the Deribit Implied Volatility Index, jumped from an annualized 36% to 48.5%.
- Traders who shorted options in recent weeks sold perpetual futures to hedge mitigate risks from volatility spike.
- Sharp discount in Deribit’s perpetual futures stemmed from the exchange selling perpetuals while liquidating a large short volatility position.
- Deribit’s BTC perpetual futures traded at a discount of $2,000 to the cryptocurrency’s average spot price across exchanges.
Lukk Strijers, chief commercial officer at Deribit, said the exchange has recently tweaked its liquidation policy, adding the steep discount in perpetual futures was negative funding rates worldwide.
Hot Take:
The steep discount in bitcoin perpetual futures indicates significant volatility in the market. Traders who shorted options and sold perpetual futures to hedge their risks may have contributed to the price slide. It is crucial for crypto readers to stay informed about funding rates and market trends to make informed trading decisions.
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