Token Futures Funding Rates Return Post-Rally; CME Surpasses Binance As Largest BTC Futures Exchange
In the wake of a surge of interest over the past month, funding rates on token futures have returned to typical levels. Following a rally that took the market by storm, platform users were paying fees from 0.2% to 0.5% every eight hours on borrowed investments to maintain long positions. The current normal allows for a sigh of relief, as funding rates have now plummeted back to around 0.01% on most exchanges.
Open Interest in Futures Skyrockets
Interest in futures has seen a rapid incline, showing an increase of nearly 40% from the end of October to surpass the $35 billion mark. However, this rapid ascent has presented market observers with cause for concern, prompting a warning for a potential market downturn. The higher the funding rates, the more incentivized traders were to consider short positions. Thus, it presented the allure of a potential profit if market prices were to experience a drop.
The Market Sees Red
A predicted downturn came to fruition as the market experienced a significant drop this Tuesday. This led to the liquidation of nearly 90% of all bullish bets, Ushering in a grand total of over $300 million in losses. Bitcoin traders witnessed a significant loss of $120 million. Meanwhile, Ethereum traders were dealt a blow with a $63 million loss. XRP and Solana also bore their portion of the brunt, experiencing over $30 million in liquidations collectively. Liquidations happen when a trader fails to meet the margin requirements, often signalling a significant turn in the pricing tide.
CME Overtakes Binance in BTC Futures Trading
In a testament to the fluid and volatile nature of the cryptocurrency arena, CME has surpassed Binance as the exchange with the largest BTC futures interest. CME currently stands tall with an open interest of approximately $3.85 billion, taking the crown from the previous leader, Binance. This shift in control is indicative of the ever-changing landscape of the crypto-market, where fortunes can be made or lost in the blink of an eye.
As the dust settles on a tumultuous period, it is clear that the shifting terrain of cryptocurrency represents both a risk and opportunity for traders. The restoration of funding rates to a normal level should provide an element of stability, but whether this will hold steady remains to be seen in this continually evolving market.