What’s the real story behind Bitcoin’s funding rate?

This week, Bitcoin reached another milestone, with the price of Bitcoin surpassing $50,000, reaching a peak of $52,000. In fact, now the argument that “ it’s closer to $100,000 than $0 ” is more widely accepted.

As the bullish momentum of BTC ’s price action permeates different sectors of the digital asset industry, the derivatives ecosystem is also reflecting this.

According to data from skew, BTC funding rates on some derivatives exchanges have recently soared to their highest levels since May to June 2019. While the average funding rate is still higher than the growth rate during this period, the current rates are much closer in comparison.

Higher funding rates typically mean that the number of longs is far greater than the number of shorts, and more longs means that the collective market is more bullish than ever about the next phase of price discovery.

From the data below, we can see a trend in Bitcoin, that is, realized volatility is rising, but implied volatility may be falling.

Since early November, Bitcoin volatility has been steadily rising on the charts, and implied volatility has shown a similar pattern. Since the beginning of January, even though the RV index has continued to rise, volatility expectations have remained low, showing a trend that is fighting against expected volatility.

Now, while this is particularly positive for floating pricing, it also presents the possibility of a sudden price breakout to the downside.

In addition, Bitcoin’s ATM volatility term structure also seems to point to a narrowing of the volatility space this year. This means that from now on, Bitcoin’s volatility will either steadily increase or steadily decrease .

But is the overall trend positive?

It is worth noting that there is another contradictory indicator. According to Santiment, the weighted sentiment towards Bitcoin has been quite negative since it surpassed $50,000. In fact, after BTC broke through the above level, there was a decrease in positive comments accompanied by a drop in social volume .

However, it is necessary to take this development a little further. We believe that in addition to cryptocurrency skeptics, many cryptocurrency advocates may also be responsible for some of the less-than-positive comments.

The original text comes from ambcrypto, with some deletions, and translated by Blockchain Knight. The English copyright belongs to the original author. Please contact the translator for Chinese reprint.