Bitcoin has undergone a drop since the local highs of $19,000. The coin currently trades for $18,500, though traded as low as $17,500 earlier today. The bounce has surprised many analysts, who thought that Bitcoin would sustain a deeper correction into the $15,000-16,000 range.
Yet this bounce has come at a cost: the funding rates of the BTC and crypto markets are rocketing higher. The funding rate is the fee that long positions pay short positions on a regular basis to ensure that the price of the futures is close to the price of the spot market.
The funding rate of Binance’s Bitcoin futures market has hit 0.08% per eight hours, which is the highest it has been in months.
The funding rate is also inching higher on other top exchanges, suggesting that Bitcoin may be overleveraged on the long side.
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Bitcoin Funding Rate Explodes Higher
The Bitcoin futures funding rates across top exchanges have begun to shoot higher, ByBt . ByBt is a derivatives tracker that follows funding rates, open interest, and other leading metrics for cryptocurrency futures markets.Related Reading: Tyler Winklevoss: A “Tsunami” of Capital Is Coming For Bitcoin
Institutional and Retail Pressure to Keep Prices Afloat
Analysts think that Bitcoin institutional and retail buying pressure could end up driving prices higher on Monday. Avi Felman of BlockTower Capital recently said on the prospects of institutional buying pressure returning on the weekdays:“Make it through the weekend and the TWAPs return”There are also signs that there is increasing retail interest, which may be able to prevent Bitcoin from correcting as a result of cascading long stop losses/closures. Analysis by Pantera Capital found that PayPal users alone may buy more Bitcoin than there are being mined each day. This supply shortage is expected to drive prices dramatically higher in the weeks and months ahead.
Related Reading: 3 Bitcoin On-Chain Trends Show a Macro Bull Market Is Brewing
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from Bitcoin Funding Rates Spike to Multi-Week Highs as Correction Loads
