Positive Sentiment in Perp MarketAug 19, 2021
After a few months of flirting with negative perpetual swap funding rates, we’re seeing sentiment recover as funding starts to gradually tick up. When the funding rates are negative, it means the perp contract is trading below the index value, and indicates there’s more selling than buying on the contracts. On the contrary, positive funding rates imply a perp price higher than the index price and are symptomatic of more traders entering longs relative to shorts.
The current funding trend looks similar to April – May 2020 where BTC suffered a flash crash and rates stayed negative for a good while. But in the aftermath of that, BTC’s funding slowly moved up as price began to trend higher.