Yesterday, funding rates fell below zero in a market sentiment reset as Bitcoin’s price declined following its new all-time high.
Bitcoin Funding Rates Dropped Below Zero Yesterday
According to the Arcane Research weekly report, funding rates dropped after a sudden spike in BTC’s ATH. They briefly fell below zero yesterday.
The “funding rate” is a Bitcoin indicator that tells us about the current periodic payments that futures contract traders are making between each other.
If the metric is positive, this means that short traders are being paid by long traders in order to maintain their positions. This situation indicates that market sentiment is bullish.
Conversely, negative indicators may indicate short traders who are willing to pay more for their position. This could indicate that market sentiment may be bearish.
Here’s a chart showing how Bitcoin funding rates have changed over the last few months.
It looks like funding rates are dropping recently. Source: The Arcane Research Weekly update - Week 45| Source: The Arcane Research Weekly Update - Week 45
The graph above shows that when Bitcoin reached a new ATH of $69k in the previous month, the indicator showed a large positive spike.
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However, BTC couldn’t keep the momentum up and the price started falling shortly after. It was hard for the funding rates to fall with it.
This was due to the decline in Bitcoin’s value. November 10th saw approximately $500 million of long liquidations.
Many traders seem to have bet on BTC’s price moving further up after its new ATH so they opened new leveraged long positions. However, due to the crash these positions had to be liquidated.
On November 15th (that is, yesterday), the indicator’s value briefly went below zero. This was the first time this has occurred since September.
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The funding rates currently are at or near zero. The market appears to be in balance as both short and long needs are equally represented.
However, with BTC’s latest downtrend, this balance may soon shift.
BTC price
At the time of writing, Bitcoin’s price is trading around $60.9k, down 8% in the last seven days. In the past 30 days, crypto has experienced a 0.3% increase in value.
Below is a chart showing the change in coin price over the past five days.
Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Unsplash.com's featured image. Charts by TradingView.com. Arcane Research: