Despite the decline in the cryptocurrency market, a warning came from an analyst indicating that funding rates are still high.
QCP Capital analysts warned investors about a clear indicator in the cryptocurrency market. Despite the decline process that has continued for about 1 week, the funding rates on the futures side are still at high levels, indicating that the current correction may continue.
While high funding rates indicate that some investors are still adding to their leveraged positions, it is implied that the market may also be keen to wipe out these players:
Despite such a big spot movement, perpetual funding rates on retail-focused exchanges still stand at 20-30%. This means that speculators are still adding to leveraged long positions in the dip. The forward curve is still surprisingly high. Even now, you can achieve a 23% risk-free return with Ethereum’s April spot purchase price. There is still strong interest to sell these spreads. Especially if the market continues to decline, we think these spreads won’t be able to stay this high for much longer.
Crypto derivative investor Gordon Grant, who has a similar view on the subject, emphasized that high funding rates indicate the presence of long position desire among market speculators. Grant said that high funding rates prove the existence of “diamond hand” speculators.
