Bitcoin funding rates remain unchanged despite plummeting to $30,000

Bitcoin funding rates plummeted in early May. While this was not a clear bear trend at the time, the price of BTC was already showing some signs of weakness. Now, this weakness has seen the digital asset dip below $30,000 for the first time in 2022 and recover. However, funding rates, which have returned to neutral, have not been affected by market volatility.

Bitcoin funding rate unchanged

Bitcoin saw some massive selling near $35,000. This is largely due to investors panicking that they may lose more holdings and thus trying to exit cryptocurrencies to mitigate those losses. The resulting fear and liquidation have combined to drive the price of the digital asset further down, and like clockwork, everything else in the market has followed this downward trend.

Related reading | Market Downtrend Triggers Bitcoin Inflows from Institutional Investors

The funding rate will prove to be one of the few rates not affected by this downward trend. After recovering from the crash earlier this month, it has returned to neutral levels, where it remains even as Bitcoin dipped below $35,000. Even as its price fell, financing rates didn’t falter.

Funding rates remain neutral | Source: Arcane Research

This follows the same trend recorded since the Dec. 4 crash. Funding rates started trending at or below neutral and have not strayed from that trend since then. This is clearly the result of the sluggish momentum caused by negative investor sentiment.

Another group that this shows is the perpetual traders. These perpetual traders have been keeping a close eye on the spot market. This is clearly a departure from the norm, as it can be seen from previous market trends that when the price of a digital asset falls, so does the funding rate.

Bitcoin Price Chart by TradingView.com

BTC crumbles to $29,000 | Source: BTCUSD on TradingView.com

This suggests that these perpetual traders tend to increase their long exposure to digital assets. Mostly, this happens near the bottom of what is considered a one-and-a-half-year trading range.

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Average funding rates come from cryptocurrency exchanges Binance and Bybit, both of which have proven to have the most presence among perpetual traders. Even with the whole Terra UST issue, the funding rate refuses to budge.

Featured image from The Economics Times, charts from Arcane Research and TradingView.com

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