Bitcoin’s stagnated price showed signs of recovery in the new year carrying most of the market along with it. An 18% surge has been registered by the digital asset in the past 15 days, and the market sentiment appeared bullish. However, some analysts predict that since Bitcoin saw an unexpected rise, a correction is imminent. The perpetual contracts for Bitcoin have been noting a positive funding rate, according to data provider Skew.
Source: Skew
According to BitMEX, the funding rate was noted to be 0.0322% and the perpetual swaps are trading at a premium rate to spot price.
Source: BitMEX
As the funding rate saw a positive spin, the premium price noted an upward swing and XBT/USD was trading at $8,740, even when the spot price was restricted to $8,731. Deribit, a Bitcoin Futures and Options Exchange, also noted the funding rate rising to 0.013% as the contract traded higher than the spot price.
Source: Deribit
Similarly, various other exchanges such as FTX, Kraken, OKEx, and Binance also reflected increased funding, as highlighted by the chart presented by Skew. The data aggregators also noted:
“Funding tends to be a good signal of market positioning”
Source: Skew
The above chart noted that the price and funding rate have been marching alongside, and as the rate noted a spike in the chart, the price of the commodity also reflected a rise. Recently, BitMEX’s funding rate shot above 0.1 as the longs were taking over the market, while shorts closed their positions. The open interest had also noted an all-time high on 14 January noting $9.8 million, while 16 January noted the open interest at $8.8 million, indicating the increased number of contracts outstanding in future and options trading on BitMEX.
