Bitcoin and Ethereum funding rates surge to over two-year highs as bullish bets get costlier


  • Bitcoin price rally past the $60,000 mark pushed the annualized funding rates for BTC contracts to more than 85% on top exchanges. 
  • The surge in funding rates is the highest since early April 2021. 
  • The annualized funding rate for Ethereum contracts on Binance exceeds 110%. 

Bitcoin’s (BTC) price rally to its 2024 peak of $64,000 has resulted in a spike in funding rates, pushing them to hit a 27-month high. Data from the centralized-exchange data platform Velo Data shows that the BTC rally has catalyzed a bullish sentiment in the futures market, which is likely to attract arbitrageurs and institutional investors. 

Also read: Bitcoin shatters $63,000 as Jim Cramer posses a rhetoric on BTC value for mankind

Bitcoin and Ethereum funding rates peak

Bitcoin price rally to $64,000, a new 2024 peak, marks the end of a prolonged bear market and paves the way for hopeful BTC holders, awaiting catalysts like the upcoming halving event in April 2024. The futures market has renewed hopes from Bitcoin’s recent bull rally, with funding rates soaring to 27-month highs. 

According to Velo Data, BTC’s funding rate on Binance surged past 89%, and is nearly 80% on the OKX exchange. The surge in annualized funding rates for Bitcoin contracts open up arbitrage opportunities for institutional investors and large wallet addresses. 

BTC

BTC Funding Rate. Source: Velo Data

On Thursday, Bitcoin trades around $62,600. The largest crypto asset by market capitalization is up 21% in the past week. 

Ethereum (ETH) rallies alongside Bitcoin as the two enjoy a high correlation of 0.93, according to Macroaxis. Ethereum futures contracts have crossed a 110% funding rate on Binance, according to Velo data.On Bybit, Ethereum funding rate is 100%, versus February 28, when it was 10%. 

ETH

ETH funding rate. Source: Velo Data

The massive spike in funding rates has brought them to their highest level in  27 months, alongside catalysts like the recent SEC approval of Spot Bitcoin ETFs in the US and the anticipation of a Spot Ethereum ETF approval by the regulator. In this context, both assets could see further increases in funding rates and popularity among derivatives traders. 

Market participants have noted the capital inflows to Spot Bitcoin ETFs in the weeks following the product’s launch, fuelling hopes for institutional interest in futures and the underlying asset. 

At the time of writing, Bitcoin price is $62,631 and Ethereum is exchanging hands at $3,469. 


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