AS BITCOIN PRICE RALLY BREAKS, WHAT CAN THE PERPETUAL FUTURES MARKET TELL US?

myminds (31)in #bitcoin • 2 years ago

One dynamic and chart we’ve covered extensively before is bitcoin’s perpetual futures market funding rate compared to price. In the previous 2021 bull run, the perpetual (perps) futures market played a key role in moving short-term prices to both the upside and downside with excessive leverage. It’s worth reviewing the state of the derivatives market and the system’s current leverage as bitcoin price has broken down from its latest rally, following U.S. equities on a potential path towards new lows.

Since the top in November 2021, the perpetual futures market has been consistently biased towards the downside (neutral funding rate is 0.10%). Simply put, more of the market participants were and still are biased short over the last eight months. Even during the latest bear market rally move, that hasn’t changed. We didn’t see the funding rate go above neutral territory showing a clear sign that long speculators and risk appetite have not returned to the market.