Bitcoin Bulls Pay Premium as Bitcoin Funding Rates Hit New Highs: Is an ETF Really Worth It?

Bitcoin hits a new high, soaring past $45,700! The crypto world erupts in cheers, but there’s a hidden twist: holding onto this skyrocketing price tag comes at a hefty cost. Bullish bets are piling up in the futures market, and it’s getting expensive to stay on top. Is this a party to remember or a bubble about to burst?

Read on to discover!

Rising Funding Rates and Their Role

Matrixport’s data analysis has shown a remarkable 66% annualized global average perpetual funding rates, particularly during Asian trading. Perpetual futures, known for their lack of expiry dates, adjust prices using funding rates to reflect the cryptocurrency’s current market value.

These rising positive funding rates mean that perpetual futures hold a premium over spot prices. Consequently, those with long positions are paying short positions to maintain their market stance.

In addition, Matrixport’s head of Research and Strategy Markus Thielen recently commented on the recent increase in funding rates to 66%, which indicates that longs are willing to pay short to stay in the market.

Also Read: Will SEC Approve Bitcoin ETF in the Next 7 Days? Exploring the Probability

The Bitcoin ETF Anticipation

Even during the holidays, optimism remains high in the crypto community. Many are hopeful for a Bitcoin ETF approval.

“Surprisingly, the bitcoin funding rate has remained elevated during the holiday period, indicating that crypto traders have stayed very bullish and expect an imminent bitcoin ETF approval.”

Markus Thielen

A Word of Caution in a Bullish Market

While high funding rates signal a bullish market sentiment, it’s essential to approach with caution. Historically, extremely high funding rates can pose challenges for long-position holders when the market changes direction. This could lead to a shift in bullish positions and subsequent price adjustments.

Performance Remains Strong!

With Bitcoin trading above $45,719, its impressive performance remains consistent. The 56% surge in the last quarter of 2023, driven by expectations around potential approvals of BTC exchange-traded funds by the U.S. Securities and Exchange Commission, sets the stage for an interesting start to the new year.