Bloomberg: High funding rates may set the stage for a Bitcoin pullback

2024-12-06 19:38:40

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ChainCatcher news, according to Bloomberg, Bitcoin has retreated after reaching an all-time high, and some traders are seeking to hedge against deeper pullback risks. The funding rate is a key indicator of leverage in the cryptocurrency market and is currently approaching historical highs.

This data indicates that traders are willing to pay a high premium to increase the leverage of their long positions, and perpetual contracts are one of the most commonly used products for investors to double down on the directional movement of Bitcoin prices. As past bull markets have shown, elevated funding rates may foreshadow a pullback.

Nathanaël Cohen, co-founder of the digital asset hedge fund INDIGO Fund, stated that the funding rate is a good way to gauge how overheated the market is, but it can also be very dangerous, as it may remain elevated for longer than expected.

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