Categories: Bitcoin Latest News

Funding Rates Return To Neutral Following Bitcoin Relief Rally

Bitcoin funding rates had seen a very negative month between mid-June and mid-July. The funding rates, which had previously remained muted, quickly declined below neutral and proceeded to spend the next one month on this level. However, there is a significant change as last week saw funding rates return to neutral.

Funding Rate Recovers On Exchanges

The bitcoin funding rates had been touching low points as the price of the digital asset struggled. This was concerning given that funding rates were expected to improve as the digital asset began to basically trade at what was described as a “discount.” This would not be farther from the truth, as funding rates fell to their lowest points this June. It indicated that perp traders were still bearish on the cryptocurrency and refrained from moving in.

Related Reading | Bitcoin Dominance Dives As Ethereum Takes Up More Space

Last week would come with good news as funding rates returned to neutral and stayed there. Binance and Bybit crypto exchanges both recorded funding rate levels of 0.01%. The return to neutral came as the price of bitcoin started a relief rally that saw it break above $23,000.

Funding rates return to neutral | Source: Arcane Research 

Open interest had also followed the same route, although it retraced during the week when the price fell once more. It showed that there is still a lot of leveraging going on in the market since the bitcoin open interest was not much different from what was recorded the prior week, even with the decline.

Bitcoin Traders Turning Bullish

The recovery of bitcoin funding rates to a neutral level is a testament to the returning positive sentiment among traders and investors. It definitely does not signal that the market has returned to its previously bullish phase, but it is an indication that investors are now looking favorably at the bitcoin and crypto market at large.

BTC retraces downwards | Source: BTCUSD on TradingView.com

It tracks along with the Fear & Greed index which has now moved out of the ‘Extreme Fear’ territory for the first time in almost three months. It saw an incredible bounce from last week’s sentiment, with a score of 18 putting it in extreme fear. Although the market is still fearful, the recovery is seeing faith return to the market. It is also evidenced in the buying pressure that has been building this week. 

Related Reading | Domino Effect On Stablecoins Leads To Reversal Of Growth Trend

The correlation of the funding rates with the price of bitcoin can either be good or bad from here on out, depending on how well the cryptocurrency performs in the market. If it continues its recovery trend, then funding rates may return above neutral for the first time in more than two months.

Featured image from CNBC, charts from Arcane Research and TradingView.com

Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…

Bitcoin funding rates had seen a very negative month between mid-June and mid-July. The funding rates, which had previously remained muted, quickly declined below neutral and proceeded to spend the next one month on this level. However, there is a significant change as last week saw funding rates return to neutral.

Funding Rate Recovers On Exchanges

The bitcoin funding rates had been touching low points as the price of the digital asset struggled. This was concerning given that funding rates were expected to improve as the digital asset began to basically trade at what was described as a “discount.” This would not be farther from the truth, as funding rates fell to their lowest points this June. It indicated that perp traders were still bearish on the cryptocurrency and refrained from moving in.

Related Reading | Bitcoin Dominance Dives As Ethereum Takes Up More Space

Last week would come with good news as funding rates returned to neutral and stayed there. Binance and Bybit crypto exchanges both recorded funding rate levels of 0.01%. The return to neutral came as the price of bitcoin started a relief rally that saw it break above $23,000.

Funding rates return to neutral | Source: Arcane Research 

Open interest had also followed the same route, although it retraced during the week when the price fell once more. It showed that there is still a lot of leveraging going on in the market since the bitcoin open interest was not much different from what was recorded the prior week, even with the decline.

Bitcoin Traders Turning Bullish

The recovery of bitcoin funding rates to a neutral level is a testament to the returning positive sentiment among traders and investors. It definitely does not signal that the market has returned to its previously bullish phase, but it is an indication that investors are now looking favorably at the bitcoin and crypto market at large.

BTC retraces downwards | Source: BTCUSD on TradingView.com

It tracks along with the Fear & Greed index which has now moved out of the ‘Extreme Fear’ territory for the first time in almost three months. It saw an incredible bounce from last week’s sentiment, with a score of 18 putting it in extreme fear. Although the market is still fearful, the recovery is seeing faith return to the market. It is also evidenced in the buying pressure that has been building this week. 

Related Reading | Domino Effect On Stablecoins Leads To Reversal Of Growth Trend

The correlation of the funding rates with the price of bitcoin can either be good or bad from here on out, depending on how well the cryptocurrency performs in the market. If it continues its recovery trend, then funding rates may return above neutral for the first time in more than two months.

Featured image from CNBC, charts from Arcane Research and TradingView.com

Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…

Tags: bitcoinbitcoin funding ratesbitcoin sentimentbtcbtcusdBTCUSDTfunding ratesmarket sentimentxbtcusdxbtcusdt

FeedzyRead More

Recent Posts

Bitcoin 6-Month Flight Plan To $188,000, Here’s The Roadmap

With Bitcoin back above $100,000, crypto analyst Leo Hart has released a 6-month roadmap on…

1 hour ago

Is Bitcoin Headed For A New ATH After $104,000 Triumph? What This Market Expert Thinks

Since reaching a local bottom of $74,000 in mid-April, Bitcoin has seen a market rebound,…

4 hours ago

Best Crypto to Buy Now as UFC Legend Conor McGregor Calls for a Bitcoin Strategic Reserve in Ireland

‘Victory to Ireland’ is how Connor McGregor signed off on an emphatic call for a…

4 hours ago

Taiwan Official Proposes Bitcoin As Part Of National Reserve Strategy

A Taiwanese politician urged the government Friday to include Bitcoin in its reserve composition. He…

8 hours ago

Analysis: Coinbase Is Buying Bitcoin, Just Don’t Call It a Treasury Strategy.

Coinbase (COIN) has its own strategy for BTC on the corporate balance sheet, but it's…

9 hours ago

Bitcoin 4H Chart Shows Bullish Consolidation – Classic Continuation?

Bitcoin is trading confidently above the $100,000 mark, having recently marked a local high near…

10 hours ago