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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.
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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.
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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.
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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.
Lebih untuk Anda
Silver nears $1 billion in volume on Hyperliquid as bitcoin remains frozen: Asia Morning Briefing
Silver perps have more volume on Hyperliquid than SOL or XRP.
Yang perlu diketahui:
- Silver futures on the Hyperliquid crypto derivatives exchange have surged to become one of its most active markets, ranking just behind bitcoin and ether in trading volume.
- The SILVER-USDC contract’s high volume, sizable open interest and slightly negative funding suggest traders are using crypto infrastructure for volatility and hedging in macro commodities rather than for directional crypto bets.
- Bitcoin is holding near $88,000 in a "defensive equilibrium" with cooling ETF inflows, uneven derivatives positioning and rising demand for downside protection, while ether lags and capital rotates toward hard assets like gold and silver.
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