3 reasons why Bitcoin traders keep a close eye on the futures funding rate By Cointelegraph

3 reasons why Bitcoin traders keep a close eye on the futures funding rate By Cointelegraph


3 reasons why Bitcoin traders keep a close eye on the futures funding rate

Futures contracts trading has grown immensely over the past year, and proof of this comes from the total rise in open interest. Open interest is the total number of outstanding contracts, and the figure has risen from $3.9 billion to the current $21.5 billion in six months, a 450% increase.

Sometimes traders assume that a high or low funding rate and soaring open interest indicate a bullish market, but as Cointelegraph has explained before, this is not the case. This article will take a quick look at the funding rate and how traders interpret the metric when trading perpetual futures contracts.

BTC futures funding rate vs. price in USD. Source: Bybt
OKEx 3-month futures basis. Source: Skew