Bitcoin hit a record high above $73,500 about three weeks ago and then quickly retreated to the $61,000 area. It’s since retraced to the current $67,600, giving bulls some hope that new records are imminent. At least one sentiment indicator, though, indicates that the price correction has more room to run.
The so-called futures funding rate – payments to traders based on the difference between perpetual contract markets and spot prices – is around a record high level, reports CryptoQuant. “Funding rates represent traders’ sentiments in the perpetual swaps market and the amount is proportional to the number of contracts,” the team explained. Positive funding rates indicate that long position traders are dominant and are willing to pay funding to short traders.
Positive funding rates, CryptoQuant continued, suggest long traders – those betting on higher prices – are dominating the market and willing to pay funding to shorts, i.e. those betting on lower prices.
The last time funding rates were this high was in April 2021. Bitcoin subsequently collapsed from above $60,000 to below $30,000 just three months later.
Interestingly, the CryptoQuant report comes alongside recent data from the U.S. Commodities Futures Trading Commission (CFTC) showing record futures short positions from hedge funds and commodity trading advisors (CTAs).
Read more: Hedge Funds Hold Record Bearish Bitcoin Bets, Data Show
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