Overheated rally? 3 warning signs emerge for Bitcoin as funding rate soars

Overheated rally? 3 warning signs emerge for Bitcoin as funding rate soars


Bitcoin (BTC) is continuing to rise to new heights above $35,000 on Jan. 6 as U.S. buyers on Coinbase further drive up the price. But the BTC futures market’s funding rate is also surging alongside futures open interest.

The combination of a high funding rate, whales in Asia selling, and a record-high futures market open interest raises the chances of a short-term correction.

BTC/USDT daily candles chart (Binance). Source: TradingView.com What’s more likely, a correction or a continuation of the Bitcoin rally?

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Currently, as Mechanism Capital’s Andrew Kang noted, the aggregated open interest of the Bitcoin futures market is at a new record-high. He said:

“Aggregated Open Interest for BTC Futures/Swaps has risen to $11B Traders are currently paying >$5B in annualized interest for the privilege of longing the corn.”

The problem is that the market is overleveraged and overwhelmingly longing Bitcoin. The term longing means buying BTC with borrowed capital in the derivatives market.

The funding rate of

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