Funding fees for perpetual swaps have surged to over 10%, even hitting 20% on major exchanges
The post Funding fees for perpetual swaps have surged to over 10%, even hitting 20% on major exchanges appeared on BitcoinEthereumNews.com.
According to IntoTheBlock, perpetual swaps funding fees have spiked significantly on exchanges, reaching above 10%, with major exchanges recording up to 20% spikes. However, the current funding rate is considerably lower compared to the highs seen in the first quarter of this year, when rates reached over 60%. IntoTheBlock warned that the current increase in funding fees could indicate speculative overheating. The firm explained that it had concerns despite the current fees being lower than at the beginning of the year. Speculative heating refers to an unsustainable rapid increase in cryptocurrency market prices due to excessive speculation. Some indicators of speculative heating include rapid price increases, increased optimism among investors, very high trading volumes, and asset overleveraging. Beyond the increasing funding fees, futures premiums have increased on multiple exchanges, including Binance, Bybit, Deribit, and OKX. Per IntoTheBlock, perpetual swaps funding fees influence Futures premiums. Vetle Lunde, the Head of Research at K33 Research, revealed the increasing futures premiums while talking to CNBC last week. Lunde mentioned that BTC and ETH premiums stood at 14%, double the percentage recorded before the U.S. presidential elections. Ethereum funding rate hits an 8-month high On November 12, the perpetual swaps funding rate for Ethereum hit an 8-month high, reaching about 6.1%. The coin has rallied about 40% since November 5, with bullish investors expecting a hit over $4,000. CryptoQuant’s analyst, ShayanBTC, reportedly warned against potentially overheating Ethereum markets due to skyrocketing funding rates. According to the analyst, the rates could also indicate overleveraged Ethereum markets, which could lead to a risk of pullbacks. ShayanBTC further revealed that amid current funding rates, traders might require new strategies to cushion the prevalent risks. The firm still mentioned that the high rates could indicate bullish sentiment among investors as Ethereum futures remain positive. ShayanBTC pointed out the…
Filed under: News - @ November 23, 2024 5:26 am