Onchain Highlights
DEFINITION: The average funding rate (in %) set by exchanges for perpetual futures contracts. When the rate is positive, long positions periodically pay short positions. Conversely, when the rate is negative, short positions periodically pay long positions.
Bitcoin futures perpetual funding rates across all exchanges offer a comprehensive view of market sentiment. As the first chart indicates, there was a notable spike in funding rates during the initial phase of 2021, corresponding with Bitcoin’s significant price surge to around $64,000 in April 2021.
This period saw positive funding rates, implying that long positions were dominant, necessitating periodic payments to short positions.
BTC: Futures Perpetual Funding Rate: (Source: Glassnode)
Moving forward, the period from mid-2021 to early 2022 illustrates a volatile yet generally declining trend in both Bitcoin’s price and funding rates. The sharp decline in prices around the end of 2021 and the beginning of 2
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