Bitcoin Decline Sees Funding Rates Plunge To Three-Month Lows


Bitcoin funding prices are down after a massive sell-off at the beginning of the week. Bitcoin made a noticeable recovery after a slow weekend, but this sell-off will quickly wipe out all the gains that have been made, and with it, funding rates have collapsed. It led to one of the steepest collapses in funding rates in recent history. This resulted in touching one of its lowest levels since February.

The factors behind rejection

Bitcoin funding rates are down due to the Monday night selloff. Most notable was the drop in crypto exchange Bybit, which fell to a three-month low of -0.0378%. It was one of the biggest drops in all cryptocurrency exchanges, which stopped Binance levels at 0.01378%. This pushed funding rates up to February 2 levels, although stopping at a higher low compared to the May 12 massacre.

Related reading | Bitcoin miner yields remain low as prices continue to drop

Negative funding rates continued throughout the week before peaking in the June decline. Bybit and Binance both saw negative rates due to the lag in the permanent spot markets. It shows significant correlation with the price of the digital asset, which fell below $31,000 on Monday night to fall at $29,000.

bitcoin finance rates

BTC funding rates see sharp decline | Source: Arcane Research

Funding rates on Binance exchange have now been at neutral to negative levels for half a year now. This is a new record for the stock exchange after enjoying some of the best months in 2021. Overall funding rates have been in neutral to well below neutral levels for the better part of 2022 and it doesn’t look like this will change anytime soon.

Bitcoin trend after decline

The decline in financing rates coincided with the decline in the price of the digital asset. Bitcoin, which has been making steady gains, lost all of that on Monday and returned to $29,000. However, this will not last as long as the digital asset starts a reversal that will bring it back above $30K by the end of Wednesday.

Bitcoin price chart from TradingView.com

BTC settles above $30,000 | Source: BTCUSD on TradingView.com

This recovery is also attributed to the fact that investors are returning to Bitcoin to look for a safe haven. Altcoins were the winner of the 2021 bull run but with the 2022 bear market taking heavy losses, and as such, investors moved to the strong digital assets like bitcoin.

Related reading | US Macroscopic Pressure Responsible for Complete Bitcoin Downtrend

With this said, bitcoin is now trading above its 20 day moving average but still below its 50 day moving average. This indicates that the bears are still largely in control of the market but that there could be a turning of the tide if there is significant buying pressure in the market.

Bitcoin is trading at $30,475 at the time of writing. It maintains its recovery trend in the early hours of Thursday. However, with the opening of trading hours in the US, more selling is expected, driving the price lower.

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

Follow Best Owie on Twitter For market insights, updates, and sometimes funny tweets…





Leave a Comment

Your email address will not be published.