Funding Rates Normalize as Bitcoin Rally Subsides
After a recent rally, the funding rate for Bitcoin is returning to normal levels. Traders had been paying higher fees to stay in their long positions, but now those rates are starting to normalize. According to data from Coinglass, fees for Bitcoin on borrowed funds ranged from 0.19% to 0.93% in the last seven days. Funding rates for other major tokens, such as Ethereum, Solana, and XRP, have also returned to normal. This suggests that many market buyers are bearish.
As funding rates reset, the crypto market has seen a significant number of liquidations in the past 24 hours. Nearly 138 million in cumulative liquidations have occurred during this time period.
Understanding Funding Rates and Market Sentiment
Funding rates are payments between short and long traders that aim to keep the price of an asset’s perpetual future contract close to its spot price. These rates reflect trader sentiment and projections for future market trends. A negative funding rate indicates that traders expect the market to go down, while a positive funding rate suggests they anticipate an upward trajectory.
Traders Remain Bullish on BTC Rally
Despite the recent pullback, analysts and prominent traders believe that Bitcoin will continue its upward trend. The screenshot provided shows that most traders expect lower Bitcoin levels in the future. However, traders like Credible Crypto and Crypto Ed remain optimistic about Bitcoin’s prospects.
As of now, Bitcoin is trading at $43,214 with a 1.41% decrease from the previous close. The open interest in the futures market stands at around $43 billion, with Bitcoin’s open interest falling to $19 billion.
Hot Take: Bitcoin Funding Rates Normalize, but Traders Remain Bullish on Rally
Despite the recent normalization of funding rates for Bitcoin and other major tokens, traders continue to anticipate a rally in BTC. The return to normal levels suggests a more bearish sentiment among market buyers. However, analysts and prominent traders are still optimistic about Bitcoin’s future performance. They believe that the recent pullback is temporary and that Bitcoin will continue its upward trend. This positive outlook is supported by factors such as favorable market metrics and strong bids. Although Bitcoin has experienced a slight decrease in price, the open interest in the futures market remains high. Overall, traders expect Bitcoin’s rally to persist despite the recent fluctuations.
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