Funding Rates Fall To Yearly Lows Following Bitcoin’s Fall Below $29,000
2022年5月19日 - 8:00AM
NEWSBTC
Bitcoin has had a rough couple of weeks leading up to this moment
and the effects of this are still being felt all across the board.
This has seen bitcoin’s price crumble below $30,000 once more.
Along with this fall has come some other brutal news for the
digital asset. One of these has been the funding rates, whose
massive dive has shown increasingly bearish momentum among the
largest traders. Funding Rates Take A Dive The Bitcoin funding
rates had been in a bit of a lull even as the price of BTC had
begun taking its beat-down at the $40,000 level. Mostly, it had
remained neutral or below neutral so the sudden drop in funding
rates is no surprise. However, the degree to which it had dropped
had been more cause for concern. This time around, funding rates
have taken a nosedive that has sent them towards yearly lows.
Related Reading | How The Tether Peg Could Predict Raging
Bitcoin Volatility Arcane Research reports that the plunge had come
in the midst of the sell-offs that had rocked the market last week.
This had seen funding rates drop across major exchanges in the
space. Most notably on May 12th when the funding rate had fallen to
a -0.0042% on the biggest exchange, Binance. Funding rates
decline to yearly lows | Source: Arcane Research An interesting
note is that funding rates, despite trending in the negative
territory, have not been this low since July of 2021. This means
that this is the most significant dip that has been recorded in the
market in the space of a year. Traders were already bearish
before now, resulting in the neutral funding rates that were
recorded the previous week. However, this proves that the larger
market is expecting more bearish trends and are therefore making
moves to protect themselves. Bitcoin Long Liquidations Is The
Trigger After the decline below $30,000, bitcoin had recorded one
of the most brutal liquidation trends in recent memory.
Liquidations had reached as high as $0.73 billion in bitcoin
liquidated in a single day, culminating in the highest liquidation
event recorded since the December 4th crash. BTC price
declines below $29,000 | Source: BTCUSD on TradingView.com Future
and perp traders had obviously borne the brunt of this and this, in
turn, had negatively affected the funding rates. The perpetual
markets trading substantially below the spot market following the
liquidations had contributed greatly to the plummet in funding
rates. Related Reading | Crypto Carnage Causes Flight To
Bitcoin Safe Haven, Dominance Demonstrates The funding rates had
begun to recover after May 12th though. Briefly returning to the
neutral territory before once more plummeting back down. However,
the fall rate has not been as deep as the previous fall.
Funding rates still remain well below neutral at the time of the
report, which means that perp traders are still very bearish on the
market, and as such, are not putting as much money into the digital
asset. Featured image from Cryptocoin Spy, charts from Arcane
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