Bitcoin Funding Rates Remain Unmoved Despite Plunge To $30,000


Bitcoin funding rates fell at the beginning of May. Although this was not an obvious downtrend at that point, BTC price was already showing some signs of weakness. This weakness has now brought digital assets below $30,000 for the first time in 2022 and back up. However, funding rates that have returned to neutral remain unaffected by this market volatility.

Bitcoin funding rates are unwavering

Bitcoin saw some heavy selling around the $35,000 level. This was mainly caused by investors panicking that they might lose more holdings, and as such, they tried to exit the cryptocurrency to mitigate these losses. The fear and the resulting filtering together drove the price of the digital asset further lower, and like clockwork, everything else in the market followed this downward trend.

Related reading | Market downtrend leads to bitcoin influxes from institutional investors

Funding rates may prove to be one of the few that is immune to this downward trend. After recovering from its collapse at the beginning of the month, it returned to the neutral level and this is where it remained even as Bitcoin crashed below $35,000. Even when its price fell, financing rates remained constant.

Central Bank of Tunisia financing rates

Funding rates remain neutral | Source: Arcane Research

This follows the same trend that has been recorded since the December 4th crash. Funding rates started in the direction of being at or below neutral and have not deviated from this since. It was clearly a result of negative investor sentiment which led to the low momentum.

Another group indicated by this is the criminal merchants. These regular traders follow the spot market closely. This is clearly a deviation from the norm because, as we’ve seen in previous market trends, funding rates go down when the price of a digital asset goes down.

Bitcoin price chart from TradingView.com

BTC crumbles to $29,000 | Source: BTCUSD on TradingView.com

This indicates that these traders are inclined towards adding more long exposure to the digital asset. Mostly, this is happening near what is seen as the bottom of the year-and-a-half trading range.

Related reading | Shiba Inu vs. Dogecoin and LUNA: Which One Will Survive the Cryptocurrency Massacre?

The average funding rate is pulled from crypto exchanges Binance and Bybit, both of which have proven to have the most presence from perp traders. Although Terra UST was fully released, funding rates refused to budge.

Featured image from The Economics Times, charts from Arcane Research and TradingView.com



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