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Funding Rates Return To Neutral Following Bitcoin Relief Rally

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Bitcoin funding rates showed a very negative month from mid-June to mid-July. Funding rates, which had previously remained low, quickly fell below the neutral level and continued to remain at this level over the next month. However, there have been significant changes as funding rates returned to neutral levels last week.

Funding rate recovers on exchanges

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Bitcoin funding rates hit low points as the price of the digital asset struggled. This was a concern given that funding rates were set to improve as the digital asset started to mostly trade at what was described as a “discount”. This is not too far from the truth, since funding rates fell to their lowest level in June of this year. This indicated that the rogue traders were still bearish on the cryptocurrency and refrained from entering.

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The past week will bring good news as funding rates returned to and remained at neutral levels. Cryptocurrency exchanges Binance and Bybit recorded funding levels at 0.01%. The return to neutral came as the price of bitcoin began to recover, causing it to break the $23,000 mark.

Bitcoin recharge rates

Funding rates return to neutral | Source: Arcane Research 

Open interest also followed the same path, although it pulled back during the week when the price fell again. This showed that the market is still heavily leveraged as open interest in bitcoin was not much different from what was recorded in the previous week, even with the decline.

Bitcoin traders optimistic

The recovery of Bitcoin funding rates to neutral levels is evidence of a return of positive sentiment among traders and investors. This certainly does not signal that the market has returned to its bullish phase, but it does indicate that investors are now looking favorably on the bitcoin and crypto markets in general.

Bitcoin price chart from

BTC retraces downwards | Source: BTCUSD on

It is tracked along with the Fear and Greed Index, which has moved beyond “extreme fear” for the first time in nearly three months. He experienced an incredible rebound from last week’s sentiment, with 18 points causing him extreme fear. While the market is still scared, faith is returning to the market as the recovery continues. This is also evidenced by the buying pressure that has been building up this week.

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The correlation of funding rates with bitcoin price from now on can be either good or bad, depending on how well the cryptocurrency performs in the market. If the recovery trend continues, funding rates could return above neutral for the first time in more than two months.

Featured image from CNBC, charts from Arcane Research and

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