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Bitcoin Holds Above $66K, but Elevated Funding Rates Call for Caution
Elevated funding rates often pave the way for temporary price pullbacks
Updated May 11, 2023, 5:27 p.m. Published Oct 21, 2021, 10:26 a.m.
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Bitcoin remains on the offensive, thanks to ProShares futures-focused Bitcoin Strategy ETF’s strong debut on the New York Stock Exchange earlier this week. The cryptocurrency bounced to $66,400, having found bids near $64,000 during the Asian hours.
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- Analysts foresee a rally toward $86,000 in the coming weeks. However, it may not be a smooth ride, as the derivatives market is beginning to show signs of overheating – often a recipe for price pullbacks.
- Bitcoin’s average funding rate or the cost of holding long positions in the perpetual futures listed on major exchanges, including Binance, has risen to 0.06% – the highest in at least six months, according to data provided by Bybit. Exchanges calculate funding rates every eight hours.
- On retail-focused exchange Bybit, the funding rate surged as high as 0.14% early today.
- “Participants need to pay close attention to the exchange funding rates represented by Bybit, where retail investors are more concentrated, and excessive rates may trigger another short-term price downturn,” Babel Finance mentioned in the weekly research note published Monday.
- While funding rates seen at press time are significantly higher than those seen before the early September sell-off and the mid-May price crash, they are not yet as high as the ones seen during the first quarter bull frenzy.
- Although a positive funding rate represents an upbeat market mood, a very high reading indicates that the leverage is heavily skewed on the bullish side and often paves the way for price pullbacks.
- Stack Funds COO and co-founder Matthew Dibb said elevated funding rates might inject volatility into the market. “Our expectation is that capital will rotate into ethereum and major altcoins while bitcoin cools off slightly,” Dibb added.
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KuCoin captured a record share of centralised exchange volume in 2025, with more than $1.25tn traded as its volumes grew faster than the wider crypto market.
What to know:
- KuCoin recorded over $1.25 trillion in total trading volume in 2025, equivalent to an average of roughly $114 billion per month, marking its strongest year on record.
- This performance translated into an all-time high share of centralised exchange volume, as KuCoin’s activity expanded faster than aggregate CEX volumes, which slowed during periods of lower market volatility.
- Spot and derivatives volumes were evenly split, each exceeding $500 billion for the year, signalling broad-based usage rather than reliance on a single product line.
- Altcoins accounted for the majority of trading activity, reinforcing KuCoin’s role as a primary liquidity venue beyond BTC and ETH at a time when majors saw more muted turnover.
- Even as overall crypto volumes softened mid-year, KuCoin maintained elevated baseline activity, indicating structurally higher user engagement rather than short-lived volume spikes.
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How a 'perpetual’ stock trick could solve Michael Saylor’s $8 billion debt problem
The bitcoin treasury firm is using perpetual preferreds to retire convertibles, offering a potential framework for managing long-dated leverage.
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