Bitcoin hit an all-time high of over $73,500 about three weeks ago, but quickly retreated to around $61,000. It has since recovered to its current level of $67,600, giving bulls hope that a new record is on the horizon. However, at least one sentiment indicator indicates there is more room for a price correction to take place.
So-called futures funding rates (payments to traders based on the difference between the perpetual contract market and spot prices) are near record highs, CryptoQuant reports. “The funding rate represents trader sentiment in the perpetual swap market, and the amount is proportional to the number of contracts,” the team explained. A positive funding ratio indicates that traders with long positions are dominant and are willing to pay money to short traders.
CryptoQuant further notes that a positive funding rate indicates that long traders, or traders who bet on high prices, are dominating the market and are actively paying out capital to short traders, or traders who bet on low prices. He went on to say that he was suggesting it.
The last time funding rates were this high was in April 2021. Bitcoin then crashed from over $60,000 to less than $30,000 in just three months.
Interestingly, the CryptoQuant report also includes recent data from the U.S. Commodity Futures Trading Commission (CFTC) showing record short futures positions by hedge funds and Commodity Trading Advisors (CTAs).
