Bitcoin perpetual traders seem to be the only ones unmoved by the digital asset’s recent breakout. BTC, which experienced a spectacular rally in the first half-week, was able to rise above the $40,000 slump and continue its upward trend. The state of funding rates has not caused perp traders to react much.
Funding Rates remain Flat
As expected, the bitcoin perpetual traders have not reacted to this recent uptrend. It is evident that the perp bas is at or just below neutral funding rates for the 115th straight day. It speaks volumes about the way perp traders view this market. Their activity has not changed significantly despite bitcoin’s price rise.
BTC funding rates remain neutral amid price growth | Source: Arcane Research
Perp traders could be skeptical about the price rise. It could be that traders expect the digital asset will follow the trend of previous uptrends this year. This uptrend is different than its predecessors, however. It has crossed above the $45,000 resistance level and has the potential to rise towards $50K.
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But, the funding rates refused to move. Even falling below neutral funding rates. This is consistent with the overall trend of the year, as there has been no increase in funding rates since 2022. Funding rates have fallen due to long-term traders quitting their positions. These closings caused perpetual prices either to align with spot prices or to remain trailing behind them.
Decreases in Bitcoin Open Interest
Perp traders aren’t only interested in the uptrend, but also fund rates. Recent declines in open interest have also been noted for perpetual. Within a span of just one week, the price had dropped from 256K BTC up to 245K BTC. The short liquidations, which rocked this market in the wake of bitcoin’s recovery could explain this.
BTC momentum remains above $47,000 Source: BTCUSD at TradingView.com| Source: BTCUSD on TradingView.com
Binance’s USDT-collateralized BTC perp is the most important perp instrument. As open interest grew, this instrument reached an all-time record. Both neural funding rates were low and the long-short ratios were below 1 followed quickly. It is important to note that the potential for crowding in the short term is there.
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An implication of this, notes Arcane Research, would be a suggestion that leverage in the crypto market remains “relatively lofty.” However, this comes with some negative sentiments. Together, this “could be a potent setup for a short squeeze if the strong momentum holds” the report reads.
CoinDesk featured image, Charts from Arcane Research and TradingView.com