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Today we will be covering the latest in the bitcoin derivatives market. As of this writing, the price of bitcoin is up around 8% from the previous day. When analyzing derivatives data, the previous two months have resulted in a periodically negative funding regime, which shows how cautious market participants have been during times of macroeconomic uncertainty.
Bitcoin price weighted by hourly perpetual funding rate demonstrates caution among market participants.
Below are the annualized funding rates, with around 10% annualized being the market neutral rate to go long. As it stands today, funding rate sentiment has been emphasizing a skewed sentiment below neutral on the downside since late January.
Funding rate sentiment emphasizes sentiment below neutral.
For more context, here are the daily average perpetual swap funding rates since the start of 2020:
The perpetual funding rate-weighted daily average bitcoin price provides more context for market sentiment.
It should be noted that past regimes of declining derivatives have seen funding rates sink much deeper into negative territory, which could be indicative of the maturing and institutionalization of the asset class.
Likewise, the annualized basis of quarterly futures contracts continues to decline, while the price has notably attracted supply.
Quarterly bitcoin futures continue to decline.
Stock indices are also trading down around 3% today, which likely contributed to the positive price action seen in the bitcoin market.
As for the level of open interest in the derivatives market, it continues its downward trend since November in BTC and USD. Open interest is down 14.76% and 44.34% respectively. With the decline in the annualized moving basis, this is another way of looking at the structural decline in risk appetite demand for bitcoin over the past five months.
