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Bitcoin Futures Funding Rate Resets as BTC Plummets Nearly 5%

2 mins
Updated by Geraint Price
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In Brief

  • Bitcoin's funding rate resets to neutral as the cryptocurrency plummets by nearly 5%, causing over $300 million in liquidations in the past 24 hours.
  • Open Interest in the futures market stood at $33.67 billion on Tuesday, with Bitcoin Open Interest in the options market surpassing $17 billion.
  • Despite the recent pullback, some traders anticipate a continued uptrend for Bitcoin, with long positions being flushed out of the market.
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In the past 24 hours, over $300 million has been liquidated in the crypto market, as Bitcoin (BTC) sharply crashed by around 5%. With that, the skyrocketing funding rate is now back to the ground.

The funding rate is a fee that helps keep the price of an asset’s perpetual future contract in equilibrium with its spot price. If the perpetual futures contracts are trading at a premium, the long traders will pay the funding fees to short traders, and vice versa.

Traders Anticipate Continued Uptrend After Bitcoin (BTC) Funding Rate Resets

The screenshot below shows that in the past seven days, long traders had to pay funding rates in the range of 0.21% to 0.38% for Bitcoin. These fees went as high as 0.89% for altcoins such as XRP.

Funding rates, apart from being just fees that help maintain the futures price near the spot price, also act as an indicator. High Bitcoin funding rates, in the positive direction, indicate that there is over-optimism in the futures market.

During such a scenario, there are increased chances of unexpected crashes, liquidating the long positions.

Read more: Where To Trade Bitcoin Futures: A Comprehensive Guide

Crypto market seven days funding rates
Crypto Market Seven Days Funding Rates. Source: Coinglass

On Tuesday, the open interest in the futures market stood at $33.67 billion. While in the options market, Bitcoin open interest hit a new all-time high, surpassing $17 billion.

Open interest indicates an interest in the derivatives (futures/options) market. A high open interest means that larger amounts of derivatives trades are active in the market.

What is Futures Trading? Source: YouTube

Read more: Best Crypto Derivative Exchanges in 2023

On Tuesday, Bitcoin fell by nearly 5% to $35,000, slightly cooling down the open interest while bringing the funding rates nearly back to neutral. 

The 5% pullback resulted in liquidations worth over $300 million in the past 24 hours.

Crypto liquidations
Crypto Liquidations. Source: Coinglass

That being said, some traders anticipate that Bitcoin is ready to continue its uptrend. A crypto trader, Mister Crypto, wrote on X (Twitter):

“Bitcoin Funding Rates got reset, Most long positions got flushed out of the market. Ready to continue our trend to the upside.”

Do you have anything to say about the Bitcoin (BTC) funding rate or anything else? Write to us or join the discussion on our Telegram channel. You can also catch us on TikTok, Facebook, or X (Twitter).

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

Top crypto platforms in the US | December 2023


In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.

Harsh Notariya
Harsh started investing in crypto during the 2021 bull market. He took the opportunity of the market crash in May to learn more about Bitcoin and blockchain technology. Since then, he has helped metaverse projects build an engaging community and educate them on Web3. He has also helped Web3 creators write educational blogs around crypto.