The past two-months have seen the worst Bitcoin funding rates. There have not been any positive funding rates during this period, while the most the market has ever seen is neutral funding rates. Even so, it is extremely difficult to reach neutral funding rates. Each week brings more challenges.
Funding rates remain below neutral
At the start of August, bitcoin funding rates were in neutral. Funding rates have returned to neutral every month since then with some brief lows along the way. The funding rates for crypto exchange Binance fell to two-month lows. In addition, funding rates for the cryptocurrency exchange have dropped to 2-month lows.
Perpetual swaps have a rate that is continuously lower than the spot market, which makes them more attractive to investors. As a result, Bitcoin traders are now less likely to be exposed to this digital asset.
The funding rates are still below neutral. Source: Arcane Research| Source: Arcane Research
This is the bearishest market since 2020, when the bull market began. Even though bitcoin open interest is at higher levels, this bearishness comes even though it has. The bitcoin funding rates were at about 0.00% on Tuesday. They had reached a two-month low earlier in week.
Bitcoin Open Interest grows
Even though funding rates have taken a dive at every point, Bitcoin open interest continues to grow despite this. Open interest has reached new heights each week, or close to it. Last week was one of the latter.
Source: BTCUSD on TradingView.com| Source: BTCUSD on TradingView.com
Open interest reached a new record high on August 29th, when it hit 398.075 BTC. It is more than 22% of total BTC available. This is a significant increase from the 186,158 BTC low point in last year, which represents a greater than 110% rise.
It is possible for there to be a short squeeze because of the high open interest and low funding rates. Investors are not afraid to invest in this market, and have chosen more conservative options.
Bitcoin’s price has also not been encouraging. The digital asset, which hit a local record of $25,000 a week earlier, is struggling to stay above $20,000.
Featured image by RushRadar. Charts by Arcane Research and TradingView.com.
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