- Bitcoin funding rates on DyDx and Deribit have turned positive.
- The coin’s “flat” Open Interest indicates that market participants are unsure of the short-term price direction.
Bitcoins [BTC] A brief rally above $63,000 has led to a spike in funding rates on derivatives exchanges such as DyDx and Deribit, Santiment noted in a post on X (formerly Twitter).
📊 #Bitcoin‘s funding rate is increasing on exchanges such as #DyDx And #Deribit. To prevent history from repeating itself after last week’s summit, these #bullish on #crypto want to see it $BTC #FOMO stay low, with #shorts open at the same (or higher) price than long positions. https://t.co/xlipAPHZPL pic.twitter.com/oD2qglaWvb
— Santiment (@santimentfeed) May 13, 2024
According to the on-chain data provider, BTC funding rates on DyDx and Deribit as of May 13 were 0.0012% and 0.037%, respectively.
These have continued to rise despite the coin’s slight increase from the $63,000 level in recent days. At the time of writing, BTC was exchanging hands at $61,928, per CoinMarketCaps facts.
Perpetual futures contracts use financing rates to ensure that the contract price remains close to the spot price.
When an asset’s Futures Funding Rate shows a positive increase, it indicates strong demand for long positions. It is considered a bullish signal and a precursor to an asset’s continued price growth.
Conversely, negative financing rates indicate high demand for short positions. This is a bearish signal indicating that market participants are betting against the price of an asset.
Not all BTC traders are convinced
While funding rates have risen, BTC Futures Open Interest has fluctuated between $29 billion and $30 billion since early May. Mint glass’ facts.
An asset’s Futures Open Interest measures the total value of its futures contracts that have not yet been settled.
When it fluctuates within a narrow range like this, traders do not aggressively add or exit their positions. This often happens during periods of low market volatility.
A review of BTC’s volatility markers on a daily chart confirmed this.
For example, the coin’s Average True Range (ATR) – which measures market volatility by calculating the average range between high and low prices over a set number of periods – has been in a downward trend since April 19.
When an asset’s ATR falls in this way, it indicates that the likelihood of price fluctuations decreases. At the time of writing, BTC’s ATR was 2618.68.
Source: BTC/USDT on TradingView
BTC’s “flat” Open Interest could be due to traders’ lack of strong conviction about its near-term price.
Read Bitcoin’s [BTC] Price forecast 2024-25
However, with the temporary rally above $63,000 a few days ago and the resulting increase in financing rates, the market is regaining confidence.
As more traders take long positions, the coin’s Futures Open Interest is expected to rise.