Share this article
Bitcoin's 4% Drop Cools Overheated Funding Rates, Data Show
Funding rates for major tokens, including BTC, have normalized to below 0.1%, indicating an exit of over leveraged bulls.
Dec 11, 2023, 6:02 a.m.
Make us preferred on Google
Bitcoin [BTC] fell early Monday, validating the caution signaled by the options market last week.
The 4% drop to $42,000 has cooled the overheated crypto perpetual futures market, clearing the way for a steady ascent into the year-end.
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
Perpetuals are futures with no expiry with a funding rate mechanism that helps tether perpetual prices to the index price. Funding rates are periodic payments of an asset between long (buy) and short (sell) position holders calculated and collected by exchanges every eight hours. A positive funding rate means the perpetual contract is trading at a premium to the spot prices; longs are dominant and are paying shorts to keep their positions open. A negative rate suggests otherwise.
A high funding rate, typically greater than 0.10% (for eight hours), is taken to represent excess bullish leverage or overcrowding of long positions.
According to data source Velo Data, funding rates for BTC, ETH and other major cryptocurrencies consistently tapped the 0.15% mark in the second half of last week, signifying an overheated leveraged market.
The situation has normalized with the early Asian session market-wide price drop, leaving funding rates for most coins in a healthy territory below 0.1%.
It's a sign overleveraged traders have been shaken out of the market. Funding rates or costs associated with leverage become a burden when the momentum stalls, forcing overleveraged traders to exit and causing a minor bullish/bearish hiccup.
The market-wide decline in the notional open interest, or the dollar value locked in open crypto futures contracts, suggests the same. As of writing, XLM, UNI, LINK and XMR showed a double-digit slide in open interest for the past 24 hours.
Open interest in bitcoin and ether was down 1.3% and 6.7%, respectively.
More For You
Pudgy Penguins is building a multi-vertical consumer IP platform — combining phygital products, games, NFTs and PENGU to monetize culture at scale.
What to know:
Pudgy Penguins is emerging as one of the strongest NFT-native brands of this cycle, shifting from speculative “digital luxury goods” into a multi-vertical consumer IP platform. Its strategy is to acquire users through mainstream channels first; toys, retail partnerships and viral media, then onboard them into Web3 through games, NFTs and the PENGU token.
The ecosystem now spans phygital products (> $13M retail sales and >1M units sold), games and experiences (Pudgy Party surpassed 500k downloads in two weeks), and a widely distributed token (airdropped to 6M+ wallets). While the market is currently pricing Pudgy at a premium relative to traditional IP peers, sustained success depends on execution across retail expansion, gaming adoption and deeper token utility.
More For You
HYPE token surges 24% as silver futures volume soars on Hyperliquid exchange
Silver futures on the crypto derivatives exchange are currently showing $1.25 billion in volume and $155 million in open interest.
What to know:
- HYPE, the native token of the Hyperliquid derivatives exchange, jumped 24% in 24 hours as trading in silver, gold and other commodities surged.
- Silver perpetual futures on Hyperliquid became the platform’s third most active market during Asia hours.
- Because trading fees from user-created markets are used largely to buy back HYPE on the open market, the spike in commodity activity is fueling demand for the token and signaling broader growth for Hyperliquid.
Top Stories
