Thu, 02/11/2021 – 13:58
CRYPTO MOVERS AND PRICES
Crypto is broadly up while bitcoin (BTC) moves above all-time highs of USD 48,200. Spot volumes are below their 30-day average on the move.
Crypto Story of the Day
On Tuesday, BTC reached new all-time highs of roughly USD 48,200 on the back of news that Tesla had invested USD 1.5 billion in the asset. The move has been accompanied by funding rates on BitMEX that are indicative of overstretched long positions.
Ahead of the news, BTC traded for about USD 39,400. The coin’s subsequent nearly 20% jump represents the largest single-day gain since July 2017. BTC added USD 150 billion to its market cap in a span of about 30 hours following the news. The move also saw the second-largest daily BTC/USD volume in the last 2 years on Bitfinex, reaching USD 1.05 billion with that day’s volume representing 120% of Bitfinex’s previous 30-day average.
BitMEX’s perpetual funding rate reached an annualized rate of 201.92% in the night between Monday and Tuesday, setting a yearly high for the metric. The funding rate has somewhat subsided since, but has nevertheless remained elevated in comparison to historical figures. Previous funding rates in excess of 150% were seen in the first week of January when the coin was, at the time, making new all-time highs of about USD 34,000.
BTC perp funding rates have been elevated since the beginning of the year, with an average annualized rate of 43.85%. For comparison, the average annualized rate for the past year has been 10.34%. Only 4 funding intervals have seen negative rates since the beginning of the year, compared to 206 negative funding rate intervals over the past year. The aggressiveness of Monday’s move is comparable to the March 12 & 13 sell-off of last year, where funding shorts paid longs with record rates of -410.63%.
While Tesla’s addition of USD 1.5 billion-worth of BTC to its balance sheet is an undoubtedly bullish event, the most consistent indicators preceding short term market turnarounds have been perpetual funding rates that are overwhelmingly either long or short biased.
This was the case ahead of the aggressive March 12 & 13 selloff, when for 2 months, funding rates at times exceeded 50% and averaged 25.50%, compared to an average of 36.10% in the 2 months preceding Monday.
BTC has certainly found buoyancy on the back of mainstream adoption and high profile endorsements. Despite fundamentally bullish headlines, extremely elevated funding rates suggest the current price has also seen substantial contribution from stretched long positions.
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