Bitcoin Traders Retain High Leverage Amidst Decline In Funding Rates – Details
back Reached $100,000 milestoneBitcoin prices suddenly plummeted on Friday, causing Expected price loss of 7%. During this decline, the asset’s perpetual funding rates in derivatives markets took a hit. However, traders may still retain enough leverage to strongly influence price movements.
Bitcoin’s short-term outlook uncertain as leverage rises
in a X posted on December 6, Blockchain analytics firm Glassnode said Bitcoin’s perpetual funding rate could have a significant impact on the asset’s short-term price.
For context, a perpetual funding rate is a periodic fee paid between traders in the perpetual futures market to ensure that the contract price remains consistent with the Bitcoin spot price. positive funding rate It indicates that long positions are paying short positions, which is bullish, while a negative funding rate represents vice versa.
According to Glassnode, BTC’s perpetual funding rate initially showed signs of stabilizing on the weekly frame, amid speculative demand. However, the asset surged to $100,000 on Thursday, driven by increased leverage in the market, with funding rates rising to 3.6 times the weekly average.
Notably, Bitcoin’s perpetual funding rate peaked at 0.062, the highest value since April. Importantly, Glassnode’s analysis team noted that this spike in interest rates showed that the derivatives market had a significant impact on Bitcoin’s rise above $100,000.
However, Bitcoin’s flash price has caused its funding rate to drop significantly, to just over 0.024. Despite the price drop, Glassnode said these rates are still relatively high compared to earlier this week, indicating that the Bitcoin market still contains a large number of leveraged positions.
This residual leverage in the market indicates significant potential for increased price volatility. Therefore, the price direction of Bitcoin in the coming days seems unclear, as a reversal on either side could triggerMass liquidationproducing a cascading effect.
STH cost basis is $112,000 price target
In other news, prominent analyst Ali Martinez release Bitcoin price prediction based on the asset’s short-term holders (STH) cost basis, which is the average price of those who typically purchased BTC over the past 155 days. It indicates the break-even level of these investors.
According to Martinez, STH behavior indicates that Bitcoin will reach a local high or a price of $112,926 based on +1 standard deviation, with the STH cost basis level adjusted upward to account for price fluctuations and behavioral trends.
At press time, Bitcoin was trading at $100,137, following a rejection at $102,000 as the cryptocurrency recovered from Friday’s crash. At the same time, the asset’s trading volume fell by 42.46% and was valued at $89.12 billion.
