You are here: Home/ News/ Bitcoin Funding Rates Surge As Liquidity & Market Makers Take A Hit
Recently, Glassnode’s Lead On-chain Analyst took to Twitter to unveil a fascinating development in the world of Bitcoin. The analyst’s tweet revealed that the funding rates in Bitcoin perpetual swap markets were now generating a staggering 6% annualized yield.
#Bitcoin funding rates in perpetual swap markets are now yielding 6% annualised.
It has been a while since futures traders could eek out more yield vs short-dated treasury bills.
Gut feel is that this is a result of the macro pullback in liquidity and market makers, allowing a… pic.twitter.com/KbM154j3F2
— _Checkɱate 🔑⚡🌋☢️🛢️ (@_Checkmatey_) May 31, 2023
This revelation has sparked considerable excitement among traders, as it has been quite some time since futures traders have been able to generate higher yields compared to short-dated treasury bills.
The analyst speculated that this phenomenon could be attributed to the recent macro pullback in liquidity and market makers. These conditions have seemingly created an environment conducive to a return to a more natural state of play in the market.
It is important to note that BTC perpetual swaps, being a riskier and more complex position, should logically yield more than T-bills. This suggests that the increased yield is not merely a speculative premium but rather a reflection of the asset’s inherent risk.
The analyst further highlighted that despite the increase in yield, open interest remains relatively low, and volumes are experiencing cyclically low levels. These factors provide additional evidence that the current situation is not driven by speculative fervor.
Bitcoin Dominance Rising
Moreover, it is worth noting that Bitcoin is making a comeback in terms of dominance when comparing open interest and volume with Ethereum. Bitcoin’s dominance in the futures market now stands at an impressive 65% and is steadily rising.
This indicates that money and liquidity are gravitating back towards the stability and liquidity that Bitcoin offers, causing a concentration of market activity around the renowned orange coin.
These revelations have piqued the curiosity of investors and market enthusiasts as the cryptocurrency landscape continues to evolve. With Bitcoin’s funding rates yielding such attractive returns, traders are closely monitoring the situation to gauge the potential long-term implications.
However, with shifting liquidity dynamics, the cryptocurrency market is striving to find a balance, and the spotlight is firmly on Bitcoin and its pivotal role in shaping the landscape of digital finance.
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