Cryptocurrency analytics firm Alphractal explored the influence of the Funding Rate of perpetual futures contracts on Bitcoin's price action.
What is the Funding Rate?
The Funding Rate reflects the balance between buyers and sellers. When optimism dominates, the Funding Rate tends to rise, indicating a growth in long positions.
New Deviations in the Bitcoin Market
Alphractal pointed out an interesting deviation: despite a high Funding Rate, Bitcoin's price has started to decline. Possible explanations include over-optimism, selling pressure, and short-term support.
Prospects and Alphractal's Warnings
The firm warns that the combination of a persistently high Funding Rate and falling prices increases the risk of liquidation. Tracking the Funding Rate could be crucial to predicting future price movements.
Alphractal's study demonstrates that understanding the Funding Rate can provide key insights into Bitcoin's future, especially in relation to current market trends.
