January 2024 saw notable fluctuations in Bitcoin’s perpetual futures market, reflected in the funding rate, open interest (OI), and trading volumes. Perpetual futures, unlike traditional futures, do not have an expiration date, allowing traders to hold positions indefinitely. A critical aspect of these instruments is the perpetual futures funding rate, a mechanism designed to anchor the futures prices to the spot market. This rate can be positive or negative, depending on whether the market is bullish or bearish.
The beginning of the month saw a bullish trend, with Bitcoin’s price rising to $46,940 by January 8, aligning with a high funding rate of 0.0003790. This scenario indicated that traders were willing to pay a premium to hold long positions, anticipating further price increases.
However, as January progressed, the market experienced volatility, with Bitcoin’s price dropping to $39,450 by January 22 and then recovering to $43,260 on January 29. The funding rate mirrored the
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